U.S. oil refineries landscape changing
U.S. refining capacity increased since 2000 as capacity additions outpaced the loss of capacity from three major refinery closures. Yet the number of refineries and companies both declined over the same period, as the concentration of refining capacity among the top five companies increased from 38 percent in 2000 to 44 percent in 2013.
Ownership of U.S. refinery capacity changed substantially in recent years, notwithstanding relatively slow changes in refinery capacity and the number of companies involved in the refining sector. An examination of company-level information and transactional data since 2000 shows both consolidation and dispersion. Almost 40 percent of large refiners (i.e., those with at least 1 percent of total U.S. capacity) in 2000 had exited the industry by mid-year 2013.
Many refining companies changed substantially between 2000 and mid-year 2013. Some key themes are:
- Specialization. Several large oil and gas producers with refining operations, including Marathon Oil Corp. and ConocoPhillips, transferred their refining assets to stand-alone refining companies.
- Refocus away from refining. Some companies demonstrated a lessened commitment to refining. BP and Chevron reduced their refining capacity (by 23 percent and 10 percent, respectively), but stopped well short of exiting refining. Total, Exxon Mobil, and Access Industries had slight reductions in U.S. refining capacity (5 percent, 3 percent, and 2 percent, respectively).
- Refocus on refining. Other companies had noticeable increases in capacity. Valero and the joint ventures Motiva (Shell and Saudi Refining) and Deer Park (Shell and Mexico's PMI Norteamerica) increased refining capacity by 277 percent, 23 percent, and 20 percent, respectively. Valero grew through acquiring companies and assets, while Motiva grew through investing in its assets, chiefly the expansion of the Port Arthur, Texas refinery, which is now the largest refinery in the United States.
- Vertical integration. Delta Air Lines, which owned no refining assets, purchased a refinery from ConocoPhillips and now produces jet fuel for its aircraft along with other petroleum products that it does not consume.
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Historically, integrated companies divested refining assets because their profitability was volatile and relatively low, particularly when compared with oil and gas exploration and production. Purchasers were willing to acquire the divested refining assets at discounted prices. Other companies viewed the potential profitability of the refining sector more favorably, leading them to acquire other companies or assets.
The ownership of refineries today reflects multiple changes since 2000. For example, in January 2000 Tosco (5th-largest U.S. refiner), Conoco (10th-largest U.S. refiner), and Phillips (17th-largest U.S. refiner) were all separate companies, and Suncor had no U.S. refining operations.
Subsequently, Phillips acquired Tosco in 2001, merged with Conoco in 2002 (becoming ConocoPhillips), sold its Denver refinery to Suncor (whereby it entered U.S. refining) in 2003, spun off two of its refineries to create WRB Refining in 2006, sold its metro Philadelphia refinery to Delta Air Lines (whereby Delta entered U.S. refining) in April 2012, and subsequently spun off all of its remaining refineries (except a small Alaska refinery), creating Phillips 66 in May 2012. These and other transactions are noted in EIA's recently updated Genealogy of Major Refiners.
Source: U.S. Energy Information Administration
Hydrostor receives $4m funding for A-CAES facility in Canada
Hydrostor has received $4m funding to develop a 300-500MW Advanced Compressed Air Energy Storage (A-CAES) facility in Canada.
The funding will be used to complete essential engineering and planning, and enable Hydrostor to plan construction.
The project will be modeled on Hydrostor’s commercially operating Goderich storage facility, providing up to 12 hours of energy storage.
Hydrostor’s A-CAES system supports Canada’s green economic transition by designing, building, and operating emissions-free energy storage facilities, and employing people, suppliers, and technologies from the oil and gas sector.
The Honorable Seamus O’Regan, Jr. Minister of Natural Resources, said: “Investing in clean technology will lower emissions and increase our competitiveness. This is how we get to net zero by 2050.”
A-CAES has the potential to lower greenhouse gas emissions by enabling the transition to a cleaner and more flexible electricity grid. Specifically, the low-impact and cost-effective technology will reduce the use of fossil fuels and will provide reliable and bankable energy storage solutions for utilities and regulators, while integrating renewable energy for sustainable growth.
Curtis VanWalleghem, Hydrostor’s Chief Executive Officer, said: “We are grateful for the federal government’s support of our long duration energy storage solution that is critical to enabling the clean energy transition. This made-in-Canada solution, with the support of NRCan and Sustainable Development Technology Canada, is ready to be widely deployed within Canada and globally to lower electricity rates and decarbonize the electricity sector."
The Rosamond A-CAES 500MW Project is under advanced development and targeting a 2024 launch. It is designed to turn California’s growing solar and wind resources into on-demand peak capacity while allowing for closure of fossil fuel generating stations.
Hydrostor closed US$37 million (C$49 million) in growth financing in September 2019.