Production problems at BP Texas City refinery won’t significantly impact gas prices through the busy summer driving season, analysts say.
The massive plant has been operating at about half-capacity this quarter as it tries to recover from the affects of power outages in April, which shut it down for three days and has left its operating rate hampered.
BP announced Tuesday that the refinery, typically capable of processing more than 430,000 barrels of crude oil a day, will continue to operate below its capacity through August.
While the April power outages – which affected Valero and Marathon refineries, as well – contributed to a five-cent hike in Houston gas prices during that spring week, analysts said the problems at the BP refinery won’t do much damage during the summer driving season.
The refining industry has been ramping up production after recent weather-related slumps and imports have been increasing to prepare for the busy driving season, said Andrew Lipow, a refining industry consultant based in Houston. The increased supply should help compensate for BP’s problems, he said.
Oil analyst Peter Beutel noted that anemic demand has put downward pressure on prices recently and that the crippled supply from the BP refinery is unlikely to reverse that trend.
The loss “certainly is not enough to ruin [the season] or put us in gasoline lines,” Beutel said. “But it certainly is enough to catch our attention.”
BP’s Texas City refinery is the third largest in the country by capacity, according to the U.S. Energy Information Administration.
The drought-related spring outages took more than 700,000 barrels of crude oil processing offline temporarily when it struck the BP, Marathon and Valero facilities.
A Valero spokesman said its Texas City refinery is now operating at planned rates. A Marathon Petroleum representative confirmed that its refinery is online, but wouldn’t comment further on the outage’s impact on the operation rate.
At BP’s refinery, both crude distillation and cracking trains shut down by the outage were running by the end of May, the company said. However, a catalytic cracker and one train of the residue hydrotreating unit remain impaired.
“Due to the impact of the emergency shutdown and restart, we are continuing to have operational issues associated with some key downstream units,” said BP spokesman Scott Dean in a written statement. “We expect to return the last of the impacted units to full capacity during August.”