March 29, 2012 / 4:20 PM / 7 years ago

EIA cuts East Coast refinery capacity to reflect closures

* EIA cuts operable East Coast refinery capacity

* New baseline reflects regional refinery closures

By Janet McGurty

NEW YORK, March 29 (Reuters) - The Energy Information Administration has changed its baseline for calculating operable refinery capacity in the Eastern United States to reflect the refineries that have closed in the region.

The revision first appeared in Wednesday’s Weekly Petroleum Status Report for the week ended March 23.

“PADD 1 refinery utilization wasn’t telling a true story,” said James Beck, spokesman with EIA, the statistical arm of the Department of Energy.

There are five Petroleum Administration for Defense Districts (PADD) in the United States and were created during World War II to organize the allocation of petroleum fuel products.

Refinery utilization for PADD 1 — the Northeastern part of the United States — was reduced by roughly 430,000 bpd to about 1.2 million bpd.

Removed from the region’s operable baseline capacity were: Sunoco’s 178,000 bpd Marcus Hook, Pennsylvania refinery, ConocoPhillips’ 187,000 bpd Trainer, Pennsylvania, refinery and the 64,000 bpd Yorktown, Virginia refinery, which Western Refining sold to Plains All American and is currently in use as terminal to store oil products.

All three refineries had been idled by the end of 2011.

Normally, baseline revisions to capacity first appear in the agency’s monthly report.

“It was such an unusual case,” said Beck, adding that because the EIA had all the information it decided to go ahead and change it in the weekly report first.

The East Coast refineries pay a premium over U.S. prices to run imported light, sweet crude. Combined with slowing demand for gasoline, these refiners have seen their profit margins pinched substantially and some have opted for closure.

Hess and partner Petroleos de Venezuela have also shut down their 500,000 bpd Hovensa refinery in St. Croix, the Virgin Islands. Although the refinery is not located in the region, it was a substantial source of supply for the Northeastern United States.

However, it is likely the baseline will be changed again soon.

Conoco has extended the sales deadline for the Trainer refinery by two months to accommodate new buying interest, which could add that plant back to the baseline. If no buyer is found by the end of May, the plant will be shuttered permanently at that time.

Sunoco is also looking for a buyer for its 335,000 bpd Philadelphia refinery. There has been some buying interest, the company has said, but still plans to idle the plant permanently by July 2012 if no buyer is found.

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