September 25, 2017 / 11:26 PM / 10 months ago

Philadelphia refiners cut rates amid crude supply issues: sources

(Reuters) - Hurricane Maria may not have made landfall on the U.S. East Coast, but it is still causing major disruptions to Philadelphia refineries.

Monroe Energy, a subsidiary of Delta Air Lines, ran out of crude oil in storage at its 185,000 barrel-per-day refinery outside of Philadelphia on Monday due to stalled deliveries, according to a source familiar with the plant’s operations. The refiner plans on eventually keeping the units hot, known as in circulation, once the remaining crude runs out, the source said.

Monroe Energy plans to use vacuum gas oil, or VGO, as a substitute later this week if crude supplies remain unavailable, the source said.

Philadelphia Energy Solutions (PES), the largest refiner on the U.S. East Coast at 335,000 bpd, cut rates by 20 percent due to supply issues, a second source. The refiner recently booked unit trains of Bakken crude out of North Dakota that is helping them keep rates higher, the source said.

Crude deliveries have been slowed by choppy waters as Hurricane Maria headed north along the Atlantic Coast after devastating Puerto Rico last week. The hurricane is expected to glance the North Carolina coast before heading east, away from the coast.

Hurricane Maria is forecast to become a tropical storm Tuesday night or Wednesday, with large swells affecting much of the U.S. east coast from Florida through southern New England, the National Hurricane Center (NHC) said on Monday.

Phillips 66 Bayway refinery in Linden, New Jersey, is not experiencing similar issues, according to two sources at the plant. It is unclear if the region’s two other refineries - one in New Jersey and the other in Delaware - are experiencing similar issues.

A spokeswoman for PES declined to comment on Monday, and Monroe Energy did not respond to comment.

Both Philadelphia refiners were running above top rates in the past couple weeks, as Hurricane Harvey shut a quarter of the nation’s refining capacity and fattened margins.

The Philadelphia refineries have historically suffered from lack of spare crude storage. They typically require crude to be transferred from large vessels to barges before being delivered to the plants.

Reporting by Jarrett Renshaw in New York; Editing by David Gregorio and Diane Craft

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