Shuttered Refineries Won't be Restarted

Finance85

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Oct 22, 2003
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U.S. energy executives told Jennifer Granholm that shuttered crude oil refineries won’t restart, Valero’s Chief Executive Joe Gorder said on Tuesday.

The comments were made to the U.S. Energy Secretary at a recent White House meeting with energy executives, Reuters reported on Tuesday.

“The one interesting thing that came out of it, too, was there was consideration for the ability to restart refining capacity that had been shut down, and I think the general sentiment was that wasn’t going to happen,” Gorder said.


Limited U.S. refinery capacity—and perhaps more critically, refinery capacity in specific U.S. geographic areas, known as PADDs—has spared worry in the United States over high gasoline prices and energy security.

US refinery run rates were north of 90% for much of the summer, according to the EIA’s Weekly Petroleum Status Report.

Shuttered refineries unlikely to start back up are the latest nail in the U.S. refinery coffin. In June, Chevron CEO Mike Wirth posited that there would never be another new refinery built in the United States.

“Building a refinery is a multi-billion dollar investment. It may take a decade. We haven’t had a refinery built in the United States since the 1970s. My personal view is that there will never be another refinery built in the United States,” Wirth said at the time.

Oil and gas companies would have to weigh the benefits of committing capital ten years out that will need decades to offer a return to shareholders “in a policy environment where governments around the world are saying ‘we don’t want these products to be used in the future,’” Wirth added.

https://oilprice.com/Latest-Energy-...Shuttered-US-Oil-Refineries-Wont-Restart.html
 
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Finance85

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And there's this from today -

Saudi Arabia’s Energy Minister has warned countries against misusing their crude oil stockpiles to manipulate the oil markets.

According to the Kingdom’s Energy Minister, Prince Abdulaziz bin Salman, who has been sparring with U.S. President Joe Biden in recent weeks, strategic crude oil stockpiles are designed to be used to manage supply shortages, not to bring down prices.

“It is my profound duty to make clear to the world that losing (releasing) emergency stocks may be painful in the months to come,” the Energy Minister said at the Future Initiative Investment conference in Riyadh.


The comment was quickly interpreted as a barb aimed specifically at President Biden, who lashed out at OPEC+ over its recent decision to lower its crude oil production targets by 2 million barrels per day after the United States spent months releasing more than a hundred million barrels of crude oil from its Strategic Petroleum Reserves to alleviate high prices at the pump ahead of midterm elections.

The warning is just the latest in the tiff between Saudi Arabia and President Biden, after the U.S. President said there would be consequences for Saudi Arabia’s decision—with Russia—to lower crude oil production.

“I am in the process, when the House and Senate gets back, they’re going to have to – there’s going to be some consequences for what they’ve done with Russia,” President Biden said last week, without getting into specifics.

The United States has released 192 million barrels of crude oil from its emergency stockpiles so far this year, according to EIA data, with plans to release even more next year.
 
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globalhawk

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[COLOR=%s]U.S. energy executives told Jennifer Granholm that shuttered crude oil refineries won’t restart, Valero’s Chief Executive Joe Gorder said on Tuesday.[/COLOR]

[COLOR=%s]The comments were made to the U.S. Energy Secretary at a recent White House meeting with energy executives, Reuters reported on Tuesday.

“The one interesting thing that came out of it, too, was there was consideration for the ability to restart refining capacity that had been shut down, and I think the general sentiment was that wasn’t going to happen,” Gorder said.


Limited U.S. refinery capacity—and perhaps more critically, refinery capacity in specific U.S. geographic areas, known as PADDs—has spared worry in the United States over high gasoline prices and energy security.

US refinery run rates were north of 90% for much of the summer, according to the EIA’s Weekly Petroleum Status Report.

Shuttered refineries unlikely to start back up are the latest nail in the U.S. refinery coffin. In June, Chevron CEO Mike Wirth posited that there would never be another new refinery built in the United States.

“Building a refinery is a multi-billion dollar investment. It may take a decade. We haven’t had a refinery built in the United States since the 1970s. My personal view is that there will never be another refinery built in the United States,” Wirth said at the time.
[/COLOR]

[COLOR=%s]Oil and gas companies would have to weigh the benefits of committing capital ten years out that will need decades to offer a return to shareholders “in a policy environment where governments around the world are saying ‘we don’t want these products to be used in the future,’” Wirth added.

https://oilprice.com/Latest-Energy-...Shuttered-US-Oil-Refineries-Wont-Restart.html[/COLOR]
This has been known for a very long time.
 

Huey Grey

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If this is true, and oil companies haven't built a new refinery since the 1970s, then they blew it off all 8 years of Reagan, all 4 years of Bush Sr (that's 12 straight years of Republican rule), 8 years of Bush Jr, and 4 years of Trump. If that's not enough time for the oil companies to build, then they never will regardless of any political climates.
 

Titanhawk2

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If this is true, and oil companies haven't built a new refinery since the 1970s, then they blew it off all 8 years of Reagan, all 4 years of Bush Sr (that's 12 straight years of Republican rule), 8 years of Bush Jr, and 4 years of Trump. If that's not enough time for the oil companies to build, then they never will regardless of any political climates.
I'm sure it's not lost on you, but the quotes are on re-starting old refineries and says nothing about whether new refineries could have been built in the last 50 years or have been prohibited in some way from being built over that time. There may be sound economic reasons to let inefficient, old refineries go.
 

Huey Grey

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I'm sure it's not lost on you, but the quotes are on re-starting old refineries and says nothing about whether new refineries could have been built in the last 50 years or have been prohibited in some way from being built over that time. There may be sound economic reasons to let inefficient, old refineries go.
I'm sure it's lost on you, but he seems accurate on new refineries. We haven't built jack shit since the 70s.

 
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Fijimn

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I'm sure it's not lost on you, but the quotes are on re-starting old refineries and says nothing about whether new refineries could have been built in the last 50 years or have been prohibited in some way from being built over that time. There may be sound economic reasons to let inefficient, old refineries go.
Poster is referencing the quote in the middle of the cut and paste—from Chevron’s CEO.
 

globalhawk

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I'm sure it's not lost on you, but the quotes are on re-starting old refineries and says nothing about whether new refineries could have been built in the last 50 years or have been prohibited in some way from being built over that time. There may be sound economic reasons to let inefficient, old refineries go.
You don't know anything about the oil industry.
 
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Bank of Hawk

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Probably, why not some billionaire build a new one, promise quicker turnaround and do it cheaper with new technologies, increasing margins.. Recoup investment in 5-10 years, oil refining will still very much be around to continue after that.
 
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lucas80

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I'm sure it's not lost on you, but the quotes are on re-starting old refineries and says nothing about whether new refineries could have been built in the last 50 years or have been prohibited in some way from being built over that time. There may be sound economic reasons to let inefficient, old refineries go.
How many refineries are there in your neighborhood? It's a lie that regulations have stopped new refineries from being built. Why weren't dozens of them built during the Reagan or Junior Bush years? Why weren't any built during the Trump years? The move for decades has been to consolidate refinery capacity by an industry maximizing profit.
 

Titus Andronicus

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I'm sure it's lost on you, but he seems accurate on new refineries. We haven't built jack shit since the 70s.

That is a really good article/interview that anyone concerned with getting right-sized refining assets in the most efficient locations should find informative.

It is about building refining capacity for Bakken oil right where it is being produced and in turn selling it right where it is being refined. Greenies should love the elimination of the need for lots of miles of pipeline, lots of miles of travel by rail, truck, or even tanker while looking for a refining location anywhere on the planet. (Not to mention the reimportation or shipment back to North Dakota once it is refined.)

......................

I guess I had not realized that the Bakken Crude is of particularly high quality. The so-called light-sweet crude oil is easier to refine than other grades and at the same time creates less pollution during the refining process.

The refinery being built is a small one at 49,500 bpd and the developer foresees repeating his strategy in other locations in the future. This would be a wonderful, cost effective, and incremental approach to saving the planet.

We should be cheerleading this effort.
 
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globalhawk

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That is a really good article/interview that anyone concerned with getting right-sized refining assets in the most efficient locations should find informative.

It is about building refining capacity for Bakken oil right where it is being produced and in turn selling it right where it is being refined. Greenies should love the elimination of the need for lots of miles of pipeline, lots of miles of travel by rail, truck, or even tanker while looking for a refining location anywhere on the planet. (Not to mention bringing it back the other way)

......................

I guess I had not realized that the Bakken Crude is of particularly high quality. The so-called light-sweet crude oil is easier to refine than other grades and at the same time creates less pollution during the refining process.

The refinery being built is a small one at 49,500 bpd and the developer foresees repeating his strategy in other locations in the future. This would be a wonderful, cost effective, and incremental approach to saving the planet.

We should be cheerleading this effort.
Too bad the author is an oil and gas lobbyist.
 

Slappy Pappy

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Demand for gas is going to fall off a cliff 10 years from now. 50% of all vehicle sales will be electric by 2030, and virtually every car company has already announced gas powered passenger vehicles will be completely phased out of production by 2035.

As stated, it takes 10 years to plan and build a refinery, and the cost of updating/rebuilding current ones is so expensive that doing so would actually be creating stranded assets that wouldn't pay for themselves by the time they are permanently shut down due to the upcoming drop in demand. Gas is only going to get more expensive as production volume drops, and more pipelines and refineries close. People still driving gas cars in 10 years will be paying twice or more than the current cost for gas.
 
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MitchLL

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Democrats propose legislation to improve lives of Americans in the coming generations. Many of those views are unpopular to citizens that only care about their own lives today.

Same concept as the Dems views on global warming.

Meanwhile...Republicans have taken a stance that they will propose whatever it takes to regain political power right now.

I guess the midterms will tell us how many Americans are selfish and how many Americans actually worry about what world their grandchildren will inherit?
 

KFSuperStar

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That is a really good article/interview that anyone concerned with getting right-sized refining assets in the most efficient locations should find informative.

It is about building refining capacity for Bakken oil right where it is being produced and in turn selling it right where it is being refined. Greenies should love the elimination of the need for lots of miles of pipeline, lots of miles of travel by rail, truck, or even tanker while looking for a refining location anywhere on the planet. (Not to mention bringing it back the other way)

......................

I guess I had not realized that the Bakken Crude is of particularly high quality. The so-called light-sweet crude oil is easier to refine than other grades and at the same time creates less pollution during the refining process.

The refinery being built is a small one at 49,500 bpd and the developer foresees repeating his strategy in other locations in the future. This would be a wonderful, cost effective, and incremental approach to saving the planet.

We should be cheerleading this effort.
Great article. That CEO is one blunt sob.

 
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lucas80

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Demand for gas is going to fall off a cliff 10 years from now. 50% of all vehicle sales will be electric by 2030, and virtually every car company has already announced gas powered passenger vehicles will be completely phased out of production by 2035.

As stated, it takes 10 years to plan and build a refinery, and the cost of updating/rebuilding current ones is so expensive that doing so would actually be creating stranded assets that wouldn't pay for themselves by the time they are permanently shut down due to the upcoming drop in demand. Gas is only going to get more expensive as production volume drops, and more pipelines and refineries close. People still driving gas cars in 10 years will be paying twice or more than the current cost for gas.
F****** Brandon!
I doubt we are free from petroleum within the lifetime of anyone posting on HROT. But, the trend line will eventually go down in the US. The world? One of the things that the dullards don't understand is that oil and distillates are global commodities.
 
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HawkRCID

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Maybe we should just let the Saudis run our strategic oil reserves?

Jerks…I hope it’s 90% electric in a decade and those guys are all begging for the days of $50 crude….their time is coming.
 
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kc78

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We have to see oil as a National Security issue moving forward. It cant' just be about gasoline prices. While we can't get off oil, we need everyone on board with the idea that we have to find alternative ways forward, and that may include creating a nationalized oil company of some sort that can drill and build refineries. We need to be able to have the oil we need and the gas we need as it's needed and relying on people who's sole motives are profit over people, or relying on countries who are not actually friendly to us to be those suppliers has to be understood as a national security concern.

OPEC could simply refuse to sell to us if they chose to as could Russia. Those countries could say that if we're not friends they'll no longer supply us. Now certainly that would hurt their profits so it's unlikely, but as third world countries continue to grow their oil demand (And especially while they're using older vehicles that require a great deal more) they could certainly expand their demand.
 
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