Delek’s 73,000 barrels per day (bpd) refinery in Big Spring, TX, has been in steady operation after a turnaround last quarter. Following the work, only brief shutdowns have occurred at the 25,000 bpd fluid catalytic cracker (FCC), which was briefly shut from March 14 to March 16 and later on from March 22 to March 27 for CO boiler repairs, according to Genscape. Delek hopes to run the refinery near, if not at, full capacity during the rest of the year to take advantage of discounted West Texas Intermediate crude at Midland, TX, (WTI-Midland), according to the company.
The Big Spring refinery has a Nelson Complexity Index (NCI) of 10.5 and processes West Texas Sour (WTS) and WTI crudes. Crude can be received via the Mesa Interconnect, Centurion, Sunrise, Medallion, and Navigator pipelines, as well as via truck for locally-sourced crudes. Delek gained ownership of the refinery with the acquisition of Alon USA, which occurred on July 1, 2017.
The refinery adjusts its crude slate to take advantage of market pricing conditions. For example, during the second half of 2017 the refinery ran at 72.9 percent WTI vs. 27.1 percent WTS, according to an SEC filing, to benefit from the wide discount of WTI-Midland crude. Delek expects Midland differentials to remain profitable and further widen later this year and into 2019 as takeaway capacity from the region is expected to become tight from continued increases in production from the Permian Basin.
The bottleneck saw mild relief from the recent expansion of Enterprise’s 540,000 bpd Midland-to-Sealy pipeline in Texas; however, additional takeaway projects are not expected online until 2019. The WTI-Midland differential rose $2.05/bbl on April 16 from the week prior to WTI-Cushing minus $3.70/bbl with the additional pipeline capacity, along with higher refinery demand. Prior to the differential's increase over the last week, it had fallen $5.30/bbl to WTI-Cushing minus $5.75/bbl over the previous six weeks, the lowest point since Genscape began assessing WTI-Midland in October 2015. This is due to growing production in the region with constrained pipeline takeaway capacity.
The Big Spring refinery is currently in the process of being monitored by Genscape and will be added to the Gulf Coast section of the North American Refinery Intelligence Service in the near future. As the potential increases for barrels to become stranded in Midland, monitoring the Big Spring refinery will add visibility into one of the few local refinery demand sources. No further significant maintenance is expected during 2018 at the refinery following the earlier turnaround, so any unplanned outages could further limit the region’s takeaway capacity.
Genscape monitors 75 percent of Permian outgoing pipeline capacity including the Midland-to-Sealy line and also reports daily Permian production figures.
In order to shed light and create transparency in the complex and ever-changing North America oil supply chain, Genscape’s suite of U.S oil products and services follow the supply lifecycle from a comprehensive view of refinery utilization, to advanced, timely oil production forecasts. Additionally, the U.S Gulf Coast Pipelines report sheds light on infrastructure changes and pipeline flows.