US Refinery Runs Hit Record Levels

Average of 17.3 million Barrels Per Day in 2018

Gross inputs to U.S. petroleum refineries reached record level in 2018, as demand for new capacity builds, according to the latest figures from the U.S. Energy Information Administration.
The EIA reports gross inputs, or refinery runs, as they are referred to, averaged 17.3 million barrels per day across 2018, the highest annual average on record and the fifth consecutive year of record-high refinery runs.
“The record-high U.S. gross refinery input levels are driven in large part by refinery operations in the Gulf Coast and Midwest regions,” said Emily Sandys, principal contributor at the EIA, highlighting Petroleum Administration for Defense Districts, or PADDs, 3 and 2, respectively.

Shale Production Provides Boost

The growing demand for domestic refinery activity in the U.S. has been partly driven by increased shale production providing cheaper feedstock and is forecast to provide good news for breakbulk operators as developers struggle to keep up with demand for capacity.

Gulf Coast states in particular have seen a benefit from this new dynamic and are now home to more than half of all U.S. refinery capacity.

“Gulf Coast refinery runs averaged more than 9.2 million barrels per day  in 2018, eight percent higher than the previous five-year average for that region and the first time the annual average surpassed 9 million barrels per day,” a spokesperson for the EIA noted.

Peak Activity in June
Refinery runs peaked in the middle of last year according to the EIA, with an average of 18 million barrels per day in June. Average weekly runs exceeded 18 million barrels per day for a total of six weeks in 2018.

“Despite record-high inputs, utilization rates have not surpassed the record of 95.6 percent set in 1998. Rather than running at higher utilization rates, refineries have increased their capacity,” Sandys adds.

2019 Maintenance

Despite the long term trend towards greater capacity, the EIA expects U.S. refinery runs in 2019 to be relatively flat compared with the record-high 2018 levels before returning to growth in 2020 when refinery runs are expected to reach a new record of 17.8 million barrels per day.

The stagnation in 2019 is expected partially as a result of high levels of refinery maintenance, however this may also be good news for breakbulk operators serving the sector as replacement and upgrade projects get into full swing.
A switch to low sulfur marine fuel mandated by the International Maritime Organization, and scheduled to come into force on Jan. 1. 2020, is also driving demand for new capacity.