January 10, 2021
As oil demand slumps due to the spread of COVID-19, the Energy Information Administration (EIA) found that as of September 1, 2020, refining capacity in the U.S. was 18.4 million barrels per day, the lowest level since May 2016, due to a series of declines in refining capacity and refinery closures in the United States. Although oil demand is expected to gradually recover with the economic recovery, such as the start of corona vaccine vaccination, it is expected to remain sluggish in the first half of 2021.(Picture is an image)
With the advent of the era of decarbonization, the environment surrounding the oil industry will be severe, taking into account stricter environmental regulations, stagnant fuel consumption, intensified competition in international markets, and many major oil refining projects scheduled to operate in China and the Middle East from 2021 to 2024. The U.S. oil refining industry is expected to experience adverse effects later this year.
In light of this situation, oil companies are beginning new initiatives at an earlier time, such as closing, consolidating, and converting refineries. In the refinery consolidation, PBF Energy (headquartered in Persippany, New Jersey) will streamline its East Coast operations. The company closed a refinery operated by Philadelphia Energy Solutions in 2019.
On the other hand, many companies in the U.S. plan to consider converting refineries into renewable diesel production facilities. In California, selling renewable diesel to the market will allow it to obtain credits under the state's Low Carbon Fuel Standard (LCFS). It will also be able to sell compliance credits based on the Federal Government's Renewable Fuel Standard (RFS).
In a specific move, Phillips 66 (headquartered in Houston, Texas) is promoting a project to convert the Rodeo refinery in California into the world's largest renewable fuel plant, with a focus on renewable diesel. Marathon Petroleum (headquartered in Findlay, Ohio) is considering plans to convert its Martinez refinery in California to a renewable diesel manufacturing facility, in addition to the Dickinson refinery in North Dakota.
In addition, HollyFrontier (headquartered in Dallas, Texas) has revealed plans to make the Cheyenne refinery in Wyoming a renewable fuel manufacturing facility. In the U.S., it seems common to think that refinery equipment conversion will increase in the future.
(IRuniverse)
