US Refining | Something's Got to Give

• The last major refinery built in the United States was in 1977 | Marathon Garyville, LA.??Most US refineries are?between 50 and 120 years old, with the average age right about 40 Years.
• New refineries are unlikely to be built in the United States?due to daunting environmental standards and policies that the Biden administration has been implementing to reduce petroleum product consumption in the future
• Five (5) refineries shuttered operations constraining the industry's existing capacity in the last couple of years including Shell Refinery (211,000 bpd) in Convent, LA and LyondellBasell Refinery (268,000 bpd) in Houston, Texas.
• Refineries are currently operating at maximum capacity?but refining margins are down. In early 2022, energy companies' high profits were primarily driven by high refining margins resulting in criticism from the Biden Administration and, more recently, California Governor Gavin.

• US consumption of crude petroleum is forecasted to?see 2.2% annual gains in volume terms through 2025 according to Crude Petroleum.

Unintended Consequences?

• As refineries age, the number of losses reduce until age takes its toll. There is a steep rise in both loss frequency and magnitude in plants more than 30-years-old. The problem is the avg. age of US Refineries exceed 40-years-old.

• In older plants, mechanical-integrity-related failures account for 65% of losses. Failure of piping becomes increasingly more prevalent as plants age. (Overall, not accounting for age of plant, piping failure accounts for 60% of mechanical integrity losses.)?

In order to prevent losses involving aging plants and equipment failure increasing, implementation of an effective mechanical integrity program is vital. Ensuring best practice metallurgy to current industry standards, inspection programs designed by qualified inspectors and corrosion engineers, along with accredited qualifications of those conducting inspections are all essential requirements.

Equipment failure increases the potential for toxic releases and vapor emissions that could lead to catastrophic explosions.

With the increasing demand for US refiners to produce more refined products with less capacity and aging equipment, perverse incentives exist to maintain the ongoing production and operations while deferring or delaying turnaround and maintenance projects.

The refining industry, the backbone of our economy, is being charged to do more with less. The investments made in the last few decades have been bandaids and unsustainable if alternative sources do not come online as projected.?

We need to remove politics and have an honest, sober, and science-based assessment of how much capacity and for how long crude refineries will be required to power our way of life.?

The lack of investment in refining has been driven primarily by forecasting demand based on a net-zero emissions future. Most of the focus and investment have been on wind/solar projects. However, there are two primary weak links in obtaining those objectives, which will also require enormous investments. a) Battery technology/availability of lithium and other rare earth elements, and b) US grid infrastructure limitations.?

See these two short videos on the challenges of each:

• Batteries? - https://youtu.be/tngNIacnQ70?list=TLGG9h2jvIikSuAxOTAxMjAyMw
• US Grid- https://youtu.be/s3ScJ_FwaZk

We are placing huge, life-altering bets on decarbonizing our future without proper assurances that the necessary science, resources, or infrastructure is in place.?Meanwhile, nuclear and geothermal are the most promising carbon-friendly base power sources but also get little attention.?

The jury is still out on if refined fossil fuels will power the future society our grandkids will inherit. Securing safe/reliable refining capacity, exploring/mining for rare earth, upgrading the grid, expanding nuclear, and innovations in geothermal are all capital-intensive propositions and should all be on the table.?

Properly planning a future where humanity flourishes or diminishes should not be left to misaligned central planners, political factions, or special interest groups.??

It is premature to cook the golden goose/refining sector that is the backbone of our economy. It's about safety, it's about national security, it's about science, and it's about time. We need to remove the politics and plan a future based on reality.?

Something got to give!

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Sources:

EIA.gov, Freedonia Focus Reports, titled "Crude Petroleum: United States", Does Age Really Matter? by IAN ROBB?- Global head of risk engineering, Liberty Specialty Markets published in Marsh JLT Specialty publication dated March 2020?