Hurricane Irene's arrival in late August was a wake-up call. When that storm struck on the East Coast and worked its way north through mid-Atlantic and New England regions it reminded us of the vulnerability of the East Coast's oil infrastructure and its dependence on Gulf Coast refining to meet consumption that far exceeds local production.
East Coast refineries are located in Virginia, Delaware, Pennsylvania, and New Jersey. They account for 7 percent of the nation's refining capability, producing more than 19 million gallons of gasoline and diesel a day, according to the Energy Information Administration. At the beginning of 2011 there were eight East Coast refineries fully operating: PBF Energy Partners' plant in Delaware City, Del. and Paulsboro, N.J.; ConocoPhillips's plants in Linden, N.J. and Trainer, Pa.; Hess Corp.'s Port Reading, N.J. plant; United Refining in Warren, Pa.; and Sunoco's refineries in Marcus Hook and Philadelphia, Pa.
These East Coast oil refineries process up to 1.6 million barrels per day (bpd). However, with the closing of ConocoPhillips's Trainer, Pennsylvania plant (185,000 bpd) the region loses about 11 percent of refinery capacity this winter. It could have been much worse.
In discussing Sunoco's September announcement to exit the refining business, spokesman Tom Golembeski said that while Sunoco intends to sell its Philadelphia (335,000 bpd) and Marcus Hook (190,000 bpd) refineries, they remain fully operational. Only if a buyer is not found would the facilities be idled and that would not occur until July, 2012.
If those refineries were to go 'off-line' it could reduce East Coast refinery operations by approximately 525,000 barrels per day. Combine that with the capacity displaced by the ConocoPhillips (Trainer, Pennsylvania) closing and you reach a reduction in east coast refinery capacity of approximately 710,000 bpd, or, 44 percent.
According to the National Petrochemical & Refiners Association, where local refinery production is concerned the East Coast is dependent on supply from distant sources, Gulf Coast refineries, and imports, because East Coast refineries contribute only about 30 percent of local demand. The Midwest is also dependent on supply from the East and Gulf Coasts, while the Rocky Mountain area and the West Coast are self-sufficient. The refineries in the Gulf Coast meet local needs and contribute about half of the East Coast petroleum product demand.
These region-to-region movements are significant because petroleum products are transported by pipelines and barges at slow rates (only a few miles an hour) over long distances. Among the long distance pipelines moving petroleum products from the Gulf Coast to the East Coast are Colonial Pipeline (1,500 miles) and Plantation Pipe Line (1,100 miles). NPRA says it can take 1.5 to 2 weeks for petroleum products to travel the entire length of these interstate pipeline systems.
While it would probably bode well for consumers in the northeast if Sunoco's facilities continue to operate without interruption, they should know that proactive measures taken earlier this year by Colonial Pipeline will serve the region well this winter. In March, Colonial had announced a series of system upgrades to be completed by summer. The completed upgrades add about 100,000 barrels per day to Colonial's daily capacity between Greensboro, North Carolina and the New York Harbor. This will increase Colonial's capacity into the New York Harbor market by 14 percent.
The capacity expansion and upgrades are part of a long-term plan, says Colonial Pipeline spokesman Steve Baker. "We're doing a brisk business into New York and Linden, New Jersey," he said earlier this week.
There's a limit but we haven't approached it in the past 42 (five-day) cycles. It's been a good long while since we've been full up there. In our three capacity expansion projects earlier this year we added stronger pumps and motors to increase the flow of product movement. What you have is the result of plans and projects where the end-product anticipates needs and serves the marketplace."
For Northeastern homeowners and motorists Colonial Pipeline's upgrades and timing could not have occurred at a better time.