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By Laura Sanicola
Jan 14 (Reuters) - Refineries in the United States, Canada
and Mexico last year experienced some 2,000 unplanned outages
that affected production, more than quadruple the number in
2015, according to data analyzed by Reuters.
Though U.S. oil and gas production has soared to record
levels, unplanned refinery outages due to mechanical failures
can weigh on utilization rates and raise costs for an industry
built on slim margins. Unions have pushed for stricter fatigue
standards that address safety on long-running maintenance
projects.
Wall Street has been cutting estimates for refiners, citing
higher downstime at refineries. Tudor, Pickering, Holt & Co. cut
its fourth quarter refining estimates by an average of 13% as
planned and unplanned outages may prevent companies from "taking
full advantage of the appealing crack spread environment."
The refineries suffered 2,091 unplanned events affecting
crude processing in 2019, according to Industrial Info Resources
(IIR), which tracks interruptions. These events are equipment
outages not part of a company's scheduled maintenance. IIR said
there also were 304 planned interruptions last year.
(Click here for a graphic: https://tmsnrt.rs/2NqOJIF )
North America had the highest number of unplanned refinery
events in the world last year, according to IIR, above the 1,806
in South America, which had second most worldwide. The United
States has about 134 operating refineries, while Canada has 14
and Mexico has six, according to government data.
The increased outages came as U.S. refiners were gearing up
to process more low-sulfur fuels. These fuels are in high demand
due to a mandate by the International Maritime Organization
(IMO) requiring ships without emissions scrubbers to use fuels
with a sulfur content below 0.5%, compared to 3.5% previously.
"Complex refineries that have access to cheaper domestic
crude have had every incentive from a margin perspective to run
plants at full speed," said Sandy Fielden, energy analyst at
financial services firm Morningstar.
U.S. refineries' utilization rate hit 93.1% in 2018 from
88.3% five years earlier, according to the U.S. Energy
Information Administration (EIA). Its 2019 data is not yet
available, but investment advisers Tudor Pickering Holt & Co.
estimated the rate fell to 88% in the fourth quarter.
U.S. gross inputs to refineries averaged 17.3 million
barrels per day (bpd) last year, according to EIA weekly
figures, though throughput was lower at 16.6 million bpd.
"The fact that there was less throughput last year but more
incidents could be because so many refineries were down,"
Fielden said.
Unplanned events can be dangerous for refinery workers.
"Some companies are not as strict about safety," said Ed
Lee, a Salt Lake City refinery safety consultant who worked at
Royal Dutch Shell for nearly three decades.
More than 10 North American refineries have changed owners
in the past five years, contributing to turnover, he said.
"The loss of experience in the workforce is really hurting
plants," said Lee.
(Reporting by Laura Sanicola; Editing by Cynthia Osterman)
