Regulations will determine refining capacity: Sunoco

Thu Nov 18, 2010 9:31pm GMT
 

* Will continue to operate as long as cash-positive

* More regulations cause higher refining operating costs

(Adds detail, quote)

HOUSTON, Nov 18 (Reuters) - Even though refiners acknowledge there is too much refining capacity in the U.S., they will likely hold on to their plants as long as they can operate cash-positive, the chief executive of U.S. refiner Sunoco Inc SUN.N said on Thursday.

"It's very hard to close a refinery, even in the United States," Sunoco CEO Lynn Elsenhans said at the Deloitte 2010 Oil and Gas Conference in Houston.

As more regulations are put in place, the cost to run refineries will rise, she said. When costs hit the point where running plants becomes uneconomical, "that's going to be the catalyst to have refining capacity go down."

Last year Sunoco shuttered its 145,000 barrels-per-day (bpd) refinery in Westville, New Jersey, to help improve run rates at its Pennsylvania plants amid weak demand for refined products. The company decided in May to make the shutdown permanent.

Elsenhans also said refiners can capitalize on diesel fuel exports amid the overabundance of capacity. The 148 refineries in the U.S. can process up to 17.6 million barrels a day, according to the U.S. Energy Information Administration

"To the extent that we have excess diesel production capacity in the U.S., U.S. refiners will have the opportunity to export that capacity to other parts of the world that are short," she said.

After closing the New Jersey refinery, Sunoco has a refinery in Ohio and two more refineries in Pennsylvania. (Reporting by Kristen Hays;editing by Sofina Mirza-Reid)

Market Update

  • Africa
  • US
  • Europe
  • Asia
UK £ USD =1.6185
Euro USD =1.2594
Rand USD =0.0886