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By Erwin Seba
HOUSTON, Aug 29 (Reuters) - Production losses for U.S.refiners from planned fall overhauls of distillation capacitywill peak in early October, according to a Reuters analysis ofIIR Energy data, while leaving output well above the level of ayear ago.
Refiners plan to pare about 1.6 million barrels per day(bpd) distillation capacity, or 8.5% of the U.S. total, duringfall turnarounds, about 400,000 bpd below that reached a yearago, according to the IIR Energy data. Total U.S. distillationcapacity is 18.8 million bpd, according government data.
Typically oil refiners shut units for planned equipmentoverhauls called turnarounds in the fall and spring. Originally,these updates would reconfigure refineries to produce motor fueloptimized for winter or summer driving. Now they are to assurereliability.
Crude distillation units (CDUs) break down crude oil intounfinished motor fuels and feedstocks for all other refineryunits.
Two-thirds of the planned capacity reductions take placealong the U.S. Gulf Coast, home to the largest concentration ofU.S. refineries, the data show.
The largest U.S. refinery, Motiva Enterprises'607,000 bpd Port Arthur, Texas, plant, will shut its 325,000 bpdVPS-5 CDU next week for a 60-day overhaul.
Part of the work will repair piping damaged by a sodiumhydroxide release that occurred soon after the crude unit wentonline in 2012.
The overhauls are fewer than last year in part becauserefiners are putting off maintenance to ramp up production ofvery low sulfur fuel oil (VLSFO), said people familiar with thematter. The less-polluting fuel will be mandated on allocean-going vessels without emissions scrubbers beginning Jan.1, under an International Maritime Organization rule.
Refiners expect the low-sulfur switch to generate higherprofits because of tighter gasoline supplies as some of thefeedstocks used to produce the motor fuel are diverted to makeVLSFO.
Royal Dutch Shell Plc in mid-September will shutthe large CDU at its 275,000 bpd Deer Park, Texas, plant formost of the two-month overhaul, said people familiar withoperations.
Motiva is counting on profits from the lower sulfur fuel topay for an expansion of petrochemical production capacity at itsPort Arthur refinery.
More than 300,000 bpd in gasoline-producing fluidiccatalytic cracking unit (FCCU) capacity will be off-line in theFall turnaround season this year, well below the total in Fall2018, according to IIR.
The largest refinery in the Midwest, BP Plc's 430,000bpd Whiting, Indiana, refinery will shut the smaller of twoFCCUs next week for an overhaul scheduled to last about a month.(Reporting by Erwin Seba in Houston; additonal reporting byJessica Resnick-Ault in New York; Editing by David Gregorio)
