Watch for Rising Gasoline prices this summer

[Stewy]

(08-05-2023, 03:03 PM)Crazyjdawg Wrote: My company used to do engineering and construction work in oil refineries before we sold off our Oil and Gas division (the projects were mostly small cap and relatively low dividend compared to pharmaceutical projects) and so I spent a lot of my 20s walking Oil refineries.

My boss at the time liked to ask me semi-open ended questions and one of the things he asked me one day was, "What is the most valuable resource when it comes to processing petroleum?"

I thought for a moment...Is it the crude? Maybe the equipment? The utilities for heating and cooling the processes? Or does he mean the operators and engineers as like a gotcha answer?

He said....time.

When a facility is running all day every day (with planned shutdowns/turnarounds only once a year at most and often times closer to 3 to 5 years), a pump being down for a day or a week or a month with no replacement or repair could cost the company millions of dollars that they will never make back, because that time is gone forever.

There is always more crude, there's always more equipment, people, electricity etc. But the time is fleeting. Every hour that you aren't refining oil is an hour that you will never get back.

I used this consideration whenever I designed anything in those refineries and actually convinced one client to install back up pumps on a few processes that would grind the entire refinery to a halt if the pump were to go down. More capital cost up front, but if that pump were down for even 1 full day, the ROI would be reached for springing for the back up pumps.

A lot of these refineries are old now (the one I did a lot of work in is over 125 years old at this point) so a lot of things are breaking down over time. You do your best to fit the work (especially preventative work to protect the most crucial equipment) into those turnaround windows but sometimes it just doesn't work out and planned work needs to be kicked to the next turnaround (which could be several years away). It's a shame when things like this occur because of how many things it impacts downstream. Hopefully, the ramifications aren't too bad.

They're so old because no local or federal govts want to provide permits for new ones.  Not in my back yard is always the mantra (same with new Nuclear Plants).  I don't think a new refinery has been built since the 70's.  Owners just keep expanding / fixing the old ones.  As a matter of fact one of the largest refineries in the country is shutting down in the next year or so because the owner wants to go more green and no one wants to buy it.  That's a huge amount of refining capacity we're losing and will never get back.