US refiners face heavy winter maintenance: Valero

OREANDA-NEWS. July 31, 2015. US refiners will begin heavy maintenance earlier next year following the high throughputs reported in 2015, further depressing crude prices, Valero said today.

The US independent refiner expects maintenance to pick up in the final months of 2015 but for utilization to drop particularly hard in early 2016. Refiners put off maintenance work earlier this year amid a United Steelworkers strike between February and May and attractive gasoline margins.

"I do think you're going to see a pretty heavy turnaround season in the first and second quarter of next year," executive vice president of refining Lane Riggs said during a conference call on second quarter earnings.

Growing turnaround work and very high crude inventories, which last week stood 92.3mn bl above volumes reported last year, will continue to depress US crude prices through the rest of the year, the company said. A narrow spread between domestic and import crude benchmarks led the company to briefly import foreign light, sweet crude to Louisiana, and Brazilian crude in the US Gulf coast, senior vice president of supply and operations Gary Simmons said.

The company declined to comment on its own maintenance plans. Valero will bring online in September a 25,000 b/d crude expansion at its 170,000 b/d refinery in McKee, Texas. Projects to increase alkylation capacity at its 90,000 b/d refinery in Houston, Texas, and to build a methanol plant in Louisiana remain under evaluation.

During the third quarter Valero will run US Gulf coast refineries at 1.57mn-1.62mn b/d, US midcontinent refineries at 445,000-465,000 b/d, US west coast refineries at 270,000-295,000 b/d, and its north Atlantic refineries at 475,000-495,000 b/d.

The company reported a \\$1.35bn profit during the quarter, up from \\$588mn in the same quarter of 2014.