BP PLC was forced to shut down two crude units at its Whiting Indiana refinery due to a fire. The refinery processes 435,000 barrels per day.
The largest US refinery in the Midwest suffered the fire Wednesday in the powerhouse, which caused a loss of cooling water, which may have damaged critical equipment. The resulting outage is raising regional fuel costs just as the agricultural industry in the region is gearing up for its busiest time of the year.
The plant supplies gasoline, diesel, and jet fuel to regional distribution centers. It is thought its shutdown could tighten the regional fuel market just as the busy harvest season begins. Diesel demand was expected to begin rising due to its use in both heating and large diesel harvest equipment
Gasoline stockpiles are at their lowest since 2014, while mid-continent distillate inventories, which includes diesel, are at their lowest seasonal level since 2006. Diesel on prompt delivery was trading at a 5 cent per gallon premium over early September delivery, according to a broker. Delivery of gasoline to Michigan was up 10 cents per gallon also, on the news.
If there were a lengthy shutdown, the refinery would divert its crude deliveries to the main storage depot in Cushing Oklahoma. There, inventories have been rising for the last eight weeks straight. Because that is the delivery point for benchmark US crude futures, such diversions, and the prospect of future builds, has been weighing on the futures and physical crude markets.
The two crude units which were shut were Pipestill 12, the region’s largest crude unit with a capacity of 255,000 barrels-a-day, and Pipestill 11A, with a capacity of 70,000 barrel-a-day.
It was noted, if the fire damage was limited to a mere control panel, the units could be restarted as soon as this weekend, and back up to full operations as soon as early next week. Some have speculated that the fact there is still a 102,000 barrel per day coker running, which supports Pipestill 12, may mean no critical equipment was damaged, and there will be minimal downtime.
