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U.S. Drilling Activity Continues to Drop Off

U.S. Drilling Activity Continues to Drop Off

The total number of active…

U.S. Refiners Set To Add Just 350,000 Bpd Capacity By End-2023

U.S. refiners are operating at the highest operating rate since before the pandemic, but they are not expected to bring relief to the tight fuel market through major capacity expansions in the short term.

Some of the biggest refiners are working on expanding the crude oil processing capacity at large existing facilities, but those additions will not fully offset the U.S. refinery processing capacity, which closed during and right after COVID.  

ExxonMobil, Valero, and Marathon Petroleum are currently working on the expansion at three large refineries, which will bring a combined 350,000 barrels per day (bpd) additional crude distillation capacity in the United States, Dylan Chase of Argus reports.

The refineries that will see their capacity expanded are Exxon's facility in Beaumont, Valero's Port Arthur refinery, and Marathon Petroleum's Galveston Bay refinery, all in Texas.

However, some 1 million bpd of refinery capacity in America has been shut permanently since the start of the pandemic, as refiners have opted to either close losing facilities or convert some of them into biofuel production sites.

In the United States, operable refinery capacity was at just over 18 million bpd in 2021, the lowest since 2015, per EIA data. 

U.S. refineries cannot catch up with demand. Not that demand has soared so much. It's the capacity for supply, globally and in the U.S, that is now a few million barrels per day lower than it was before the pandemic.

In the short term, refiners are boosting utilization capacity, which is now at its highest since the end of 2019. Marathon Petroleum, for example, expects total throughput volumes of roughly 2.9 million bpd in the second quarter, which would be a 95% utilization rate.


"I think with supply chain disruptions, labor disruptions, the disruption economically during COVID, there's a little bit more uncertainty on new addition, refining capacity coming into the marketplace," Brian Partee, Senior Vice President, Global Clean Products Value Chain, at Marathon Petroleum, said on the Q1 earnings call early this month.

By Charles Kennedy for Oilprice.com

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  • Mamdouh Salameh on May 26 2022 said:
    There is hardly any spare refining capacity currently in the world. This and high taxes are behind the rising prices of gasoline and diesel and also the shortages. And while rising crude oil prices are a factor, it is not the only one to blame.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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