Running at over 97 percent capacity, Texas refineries are doing all they can to supply the nation and world with gasoline, diesel fuel and jet fuel.

The Permian Basin Petroleum, Texas Oil & Gas and Texas Independent Producers & Royalty Owners associations say the situation is challenging.

TIPRO President Ed Longanecker said Gulf Coast refinery utilization reached 97.8 percent for the week ending July 24 and it was still at 97.9 percent as of Aug. 14 according to the U.S. Energy Information Administration.

“Refineries can run at those levels for a period of time, but there is not much room for error,” he said. “When a facility has to go offline for maintenance or because of an unexpected outage, there is less spare capacity elsewhere in the system to make up the difference.”

Longanecker said building more refineries sounds like an obvious answer, but in practice it is much more difficult.

“A new large-scale refinery is a major investment that can take years to permit, engineer and build,” he said. “Companies also have to consider what fuel demand will look like decades from now when deciding whether that investment makes sense.

“For those reasons refiners have generally found it more practical to expand or upgrade existing facilities than to build entirely new ones.”

Longanecker said the America First Refining project being developed at the Port of Brownsville is a notable exception.

“This facility is being designed to process domestically produced light shale crude and it has secured a 20-year offtake agreement,” he said. “If completed as planned it will be the first new large-scale U.S. refinery developed in nearly 50 years.

“The crude oil supply issue is a little more complicated.”

Longanecker said Gulf Coast refineries have nearly 10 million barrels per day of capacity and many of the region’s largest facilities were built or upgraded to process medium and heavy sour crude.

Read the full article by Bob Campbell on Oaoa.com