U.S. Refining Bottleneck

We take a look at greenfield and brownfield expansions and closures in the US refining industry

U.S. Refining Bottleneck


The story of high U.S. and global gasoline and diesel is as much about oil prices as it is crack spreads, as we've discussed previouslyU.S. refinery closures have contributed to recent tightness in refined product marketsWe look at closures by PADD and year in addition to greenfield additionsNIMBY is a real thing - no large greenfield refineries have been built in the U.S. since 1977 and none are plannedU.S. refineries may be in the midst of a golden age of refining


U.S. Refining Expansion or Contraction

It is indeed true, no large greenfield refinery has been built in the U.S. since 1977.  What that fact forgets, however, is there has been significant brownfield expansion at U.S. refineries.

Indeed, refineries built since 1977 have expanded capacity by 185%.

Atmospheric distillation closures in the U.S. totaled 2.7 million barrels per day through early 2021 per EIA while downstream capacity is an even larger 4.5 million barrels per day.  Closures by Petroleum District (PADD) are shown.

Refinery closures have accelerated in recent years.  Since 2010 48% of U.S. atmospheric distillation and 60% of downstream charge capacity has been retired, driven by a handful of large refinery closures.

Despite U.S. closures, brownfield expansions have allowed U.S. operable capacity to increase, until 2020 when COVID and regulatory pressures led to multiple closures.

Despite high cracks, U.S. refinery utilization has room to work higher.  The U.S. is simply more connected to global markets than ever.

A full-list of U.S. refinery closures is shown below.