Where are U.S Refineries Concentrated?

Of the more than 17.3 million barrels per day (bbl/d) of refinery capacity located in the United States as of January 1, 2012, about 44% (or nearly 7.7 million bbl/d) is located along the Gulf Coast. As the map below indicates, there are a number of refineries, some of them very large, situated along the coasts of Texas, Louisiana, Mississippi, and Alabama.

The U.S. Energy Information Administration's annual Refinery Capacity Report provides capacity information about individual refineries as of January 1 each year. The report identifies refineries that are operable at the beginning of each year. Operable refineries are further classified as either operating or idle. A refinery could be idle for a number of reasons including routine maintenance, unplanned maintenance, or market conditions.

The Refinery Capacity Report also identifies refineries that were new, reactivated, or shut down in the previous calendar year, as well as refineries that were sold in the previous calendar year. The report includes detailed information about the atmospheric crude oil distillation capacity at each refinery and the capacities for several important downstream refinery units that are used to process the products coming from the atmospheric crude oil distillation unit for further processing.

Many refineries are located close to crude oil production centers such as the Gulf Coast (which has significant volumes of crude oil produced both onshore and offshore); near destinations for importing crude oil; or near major population centers where much of the refineries' output will be needed (e.g., California and the areas near Philadelphia, New York City, and Chicago).

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NOAA Predicts a Near Normal 2012 Atlantic Hurricane Season

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On May 24, 2012, the National Oceanic and Atmospheric Administration's Climate Prediction Center said that, for the six month hurricane season beginning June 1, there is a 70% chance of 9 to 15 named storms in the Atlantic Basin, of which 4 to 8 may strengthen to hurricanes. Of those, 1 to 3 may become major hurricanes (Category 3, 4, or 5). During the hurricane season from 1981 through 2010, the Atlantic basin averaged 12 named storms and 6 hurricanes each year, 3 of which were major hurricanes.

As of June 1, 2012, there have been two named Atlantic Basin storms (Tropical Storms Alberto and Beryl).



Tropical storms and hurricanes can temporarily disrupt the U.S. oil and natural gas supply chain (producing fields, gathering, processing, refining, and transportation), especially in the Gulf Coast region. The U.S. Energy Information Administration's Federal Offshore Gulf of Mexico reporting region (GOM Fed) is a key component of U.S. crude oil and natural gas production.

The GOM Fed region provided nearly one quarter of total U.S. crude oil production in 2011, the highest share among Federal offshore regions and second only to Texas among individual states. Driven by increasing volumes associated with deepwater and ultra-deepwater development activity, the GOM Fed region helped to reverse a decades-long decline in U.S. crude oil production in 2009. GOM Fed region production declined in 2010 and 2011, largely the result of suspended drilling activity following the Macondo oil spill. Exploration and development operations have since resumed, however.

The potential impact of hurricanes on U.S. natural gas supply is comparatively muted, as the GOM Fed region accounts for a relatively modest portion of total U.S. natural gas production. The GOM Fed region supplied about 8% of total U.S. marketed natural gas production in 2011, down significantly from a decade ago, when the region had an approximate one quarter share. The GOM Fed region's relative contribution has diminished as a result of both gradually declining offshore production and significant increases in Lower 48 output, due primarily to expanding shale gas developments in several areas of the country.

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Refinery Utilization Rates React to Economics in 2011

The divergence of West Texas Intermediate (WTI) and Brent crude oil prices in 2011 affected refinery utilization in the United States, particularly in the East Coast (PADD 1) and Midwest (PADD 2) regions. Historically, refineries in these districts operated at 80-90% of their capacity. Changes in refining economics last year contributed to real contrasts in refinery utilization in some of the PADDs (see Overview chart).

Source: U.S. Energy Information Administration, Refinery Utilization and Capacity.

 Some key findings by PADD include:

• PADD 1. East Coast refining typically relies on imports of crude oil based on the Brent crude price, which, on average, increased to a $16-per-barrel premium over WTI spot prices in 2011. As a result, two East Coast refineries idled capacity due to poor economics, while another is considering selling or shutting down. PADD 1 utilization averaged only 68% of operable capacity in 2011, which includes the idle capacity of closed refineries. This utilization rate reflects both the drop in East Coast refining capacity and lower crude oil inputs.
• PADD 2. Midwest refineries benefitted from supplies of less expensive crude oil coming from Canada and increased production in the Bakken formation. Thus, PADD 2 refineries averaged about 91% utilization in 2011, even with increased refining capacity. As a result, PADD 2 average crude oil inputs of nearly 3.4 million barrels per day were at the highest level since 2000.
• PADD 3. Gulf Coast (PADD 3) continued capacity expansions as refineries upgraded infrastructure to maximize yields. Growing oil production in Texas and the Midwest contributed to increased inputs. The Gulf Coast refineries were able to use different types of crude oil to maximize production. Refineries in this region used cheaper sources of crude compared to the rest of the country.
• PADDs 4 and 5. Refinery closures, outages, and a lack of access to less expensive crude oil reduced inputs in 2011 to refineries in PADDs 4 and 5 and helped drive down utilization rates.