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Electricity Shortage in California: Issues for Petroleum and Natural Gas Supply |
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4. Constraints Outside the Refinery Gate
A. SummaryRefineries are also indirectly exposed to forced processing rate reductions and even complete shutdowns from disruption of services outside the refinery. Services that could require a refinery to reduce operating rates if disrupted include crude oil supply, product pipelines, railroad tank car movements, cooling water supply, waste water treatment, alkylation acid supply and disposal, and hydrogen supply. If disruptions to these services are frequent or prolonged, a refinery could be forced to shut down. |
Refineries receive crude oil from two sources: waterborne deliveries by ship and domestic production from California crude oil producing fields. About one-half of the crude oil processed at California refineries comes through waterborne deliveries from Alaska or foreign imports, the other half from domestic production. Although refiners expressed concern about supply of waterborne cargoes delivered through third-party terminals, the greatest concern appears over the integrity of pipeline shipments of domestic crude oil, particularly very heavy crude oils such as from the San Joaquin valley.
The refineries that are at high risk of complete shutdown from a rotating electricity outage also are more dependent on California crude oil (Table 4-1). Refineries in the Bakersfield and Santa Maria region north of Los Angeles receive 100 percent of their crude oil supply from California oil fields.
| Table 4-1. Sources of Crude Oil Supply, 2000 (barrels per day) | ||||
| Number of Refineries |
California | Alaska | Foreign | |
| By Refining Region | ||||
| Los Angeles | 11 | 432,277 | 232,437 | 299,803 |
| San Francisco | 6 | 302,733 | 186,735 | 170,475 |
| Bakersfield / Santa Maria | 5 | 133,835 | 0 | 0 |
| By Refinery Risk of Exposure to Rotating Outages | ||||
| High | 5 | 350,661 | 96,628 | 41,434 |
| Moderate / Low | 8 | 420,585 | 310,328 | 419,984 |
| Undefined | 9 | 97,599 | 12,216 | 8,860 |
| Notes: Classification of refineries by location and risk of exposure to rotating outages is provided in Table 3-1. | ||||
| Source: Energy Information Administration, EIA-810 Monthly Refinery Report. | ||||
Crude oil deliveries from ship (Alaskan or foreign) to shore tanks are not likely to be exposed to power outages because shipboard generators provide the power to pump the crude oil to shore tanks. However, dock operators may suspend ship unloading operations for the duration of an electrical outage because of safety concerns. The exposure that concerned refiners the most was from waterborne deliveries through third party terminals separate from the refinery.
Domestic crude oil supply faces two significant risks. First, pipeline deliveries generally go through several pumping stations and power loss at any one pump station would significantly reduce throughput rates and possibly disrupt shipments completely. Perhaps more significant is that some of this California crude oil is very heavy and requires heated pipelines in order for the oil to flow. Loss of electricity and pipeline flow can cause the heavy crude oil to begin to solidify requiring clearing which could result in an extended loss of service.
Crude oil inventories provide a short term buffer against supply disruptions. The average level of crude oil inventory at California refineries last year was equivalent to 7 days of operation (50 percent of available storage capacity). At individual refineries the end-of-month crude oil stocks ranged from a low of 3.5 days (25 percent of capacity) to a high of 11 days (80 percent of capacity) at individual refineries.
There is also a large volume of trade in unfinished oils between refineries in California. Last year an average 150,000 barrels per day moved between refineries, primarily by pipeline (Table 4-2). Refineries that face a high risk of complete shutdown in the event of a rotating electrical outage are net suppliers of unfinished oils while moderate and low risk refineries are net consumers. Refineries that lose unfinished oil supply because of the shutdown of a pipeline or supplying refinery have the short-term options of drawing from inventory and/or increasing crude runs and the long-term option of purchasing unfinished oils from outside the region.
| Table 4-2. Unfinished Oil Movements Between California Refineries, 2000 (barrels per day) | |||
| Number of Refineries |
Receipts | Shipments | |
| By Refining Region | |||
| Los Angeles | 11 | 111,250 | 66,984 |
| San Francisco | 6 | 91,790 | 29,402 |
| Bakersfield / Santa Maria | 5 | 5,004 | 53,402 |
| By Refinery Risk of Exposure to Rotating Outages | |||
| High | 5 | 37,601 | 63,822 |
| Moderate / Low | 8 | 168,437 | 48,978 |
| Undefined | 9 | 2,005 | 36,987 |
| Notes: Classification of refineries by location and risk of exposure to rotating outages is provided in Table 3-1. Excludes shipments between Tosco Carson and Tosco Wilmington refineries. Receipts exceed shipments because of product delivered from outside California. | |||
| Source: Energy Information Administration, EIA-810 Monthly Refinery Report. | |||
Virtually all refineries depend on pipelines to move product from the facility. Product pipelines have somewhat greater exposure to rotating electrical outages because each line usually has several pumping stations, which may be in different rotating outage blocks. This increases the probability that a pipeline will be affected during any outage. As a practical matter, although there are exceptions, a significant electrical outage anywhere in a pipeline system typically results in the shutdown of that entire line for the duration of the outage. A pipeline with some reserve capacity (a maximum flow rate higher than the average flow at a particular time) may be able to make up for several hours of downtime in a day, but a line that is near capacity will likely not be able to do so.
The greatest risk arises from the cumulative effect of a pipeline experiencing several outages during a week. The problem evolves as the refineries fall behind in deliveries of product to the end users with each shutdown. With a pipeline running at or near capacity a cumulative loss of volume over a short period could become impossible to make up.
During 2000, refineries carried stocks of finished motor gasoline plus motor gasoline blend components that averaged about 11 days of production, which corresponds to about 50 percent of shell storage capacity. Because pipeline product movements are made in large batches, the end-of month gasoline stocks in individual refineries ranged from an average low of 7 days to an average high of 15 days of production. These simple averages imply that refineries could possibly handle gasoline product pipeline outages of anywhere from 3 to 11 days depending on the initial inventory level before their tanks become full and are forced to shut down production. However, the problem is much more complex since most of the product pipelines are common carrier pipelines that move product for all of the refineries. If several refineries have high inventories and scheduled shipments are disrupted, recovery may not be fast enough to prevent a refiner from cutting back production rates.
Overall, it appears that petroleum product pipelines in California are relatively well positioned to deal with electrical outages of short duration, but as is the case with other segments of the petroleum industry, this situation varies within the State, and according to the unique circumstances of any outage.
Essentially all of the petroleum product pipelines in California are now operated by Kinder Morgan Energy Partners, broken into four systems:
These pipelines supply not only most of the California markets (the exception being portions of the Los Angeles and San Francisco areas supplied directly from the refineries), but also provide virtually the entire supply for Las Vegas and Reno, Nevada, and much of the supply for Phoenix and Tucson, Arizona.
Kinder Morgan's northern California pipelines appear to be significantly more vulnerable to electrical outages than are the systems in the southern part of the State. The major portions of northern California pipelines operate very close to current capacity during peak seasons, leaving very little opportunity to make up for any volumes lost due to shutdowns. The system is mostly served by Pacific Gas and Electric, under interruptible tariff rates. (The 100 hours per year of allowable interruptions have already been used for this year.) The system can continue in operation (at reduced pumping rates) with one pump station shut down, but cannot operate without power to certain critical origination or junction points.
The three southern California systems operated by Kinder Morgan are generally seen as less vulnerable to electricity supply issues than those in the north, due both to their sources of supply and to a somewhat greater degree of surplus capacity. These systems are largely served by Southern California Edison and are subject to 150 hours per year of interruption, of which about half have already been used. Interruptions this summer are subject to "responsible parameters" as defined by the California Public Utilities Commission, i.e. no more than one event per day lasting up to 6 hours, for a total of no more than 24 hours per week or 40 hours per month.
Over the past several years, Kinder Morgan has undertaken a number of projects to expand capacity through its southern California petroleum product pipeline systems. These expansion projects have included, in various segments, larger pipe diameters, increased pump horsepower, addition of chemical drag reducing agents, crossover piping between parallel lines, and increased storage capacity. Additionally, generators have been added to receiving points to operate valves and safety equipment, allowing shipments to continue without outside power supply to those facilities. In general, Kinder Morgan management expresses the belief that any impact on product pipeline operations from power outages this summer will be less serious than those in early 2001 and will not be likely to result in significant product outages.
Should rail car flows be interrupted due to signal or switch problems or other issues, refinery volumes can be impacted. Refineries depend on receiving feedstocks, blendstocks, chemicals and catalysts (e.g., ethanol, methanol, butanes, and alkylation acid) by rail car and delivering some products by rail car. Serious interruptions to rail car movements would probably result in refineries reducing processing rates rather than being forced into complete shutdowns.
Refineries process hydrocarbons at high temperatures and pressures. Cooling water is used to control operating temperatures and pressures and the loss of cooling water circulation within a refinery can lead to unstable and dangerous operating conditions requiring an immediate shut down of processing units. Cooling water supply from the outside is used to make up for water losses such as from cooling tower vaporization. Refineries generally maintain small water makeup inventory of about 2 to 8 hours of supply. Loss of cooling water from an outside supplier results in a depletion of the makeup water inventory. A refinery would immediately begin reducing operating rates followed shortly thereafter by a controlled shutdown.
Almost all refineries in California generally receive their process cooling water supply from third parties such as municipal water districts. Supply of cooling water is generally expected to be at low risk from disruption from rotating electricity outages for 3 reasons:
Significant volumes of waste water are produced during the refining process. For example, water is removed from crude oil delivered to the refinery, and fresh water is used to wash impurities from the crude. Loss of electricity to waste water treatment or an overload of high organic content wastewater resulting from a refinery disruption can result in a severe decline in treatment plant capabilities and take as long as 2 weeks to return to normal operation.
Some refineries operate their own waste water treatment and others rely on municipal water treatment services. Waste water treatment operated by refineries will be as exposed or protected from rotating electrical outages as the rest of the refinery process units.
About 10 percent of the California gasoline pool comes from a gasoline blendstock called alkylate. Alkylate is a high octane product of an alkylation process unit. The alkylation process unit reacts isobutane with olefin hydrocarbons (e.g., propylene, butylene) in the presence of an acid catalyst, usually sulfuric acid or hydrofluoric acid. Fresh high concentration acid is brought into the refinery by truck, rail car, or pipeline from third party suppliers. Used low concentration sulfuric acid is returned via truck or rail car for regeneration.
Disruption of acid supply or disposal may impact gasoline production in two ways. First, alkylation units are generally run at maximum capacity and the unplanned shutdown of an alkylation unit would represent a loss of volume of this very important gasoline blendstock. Premium California gasoline would be the most severely impacted. Second, refiners may encounter difficulties storing the [olefin hydrocarbon] alkylation unit feedstock that is a byproduct of other refinery process units (primarily catalytic crackers). The shutdown of the alkylation unit may then have a rippling effect through the entire refinery operation. An alkylation unit could take 1 to 2 days to restart while restarting both an alkylation unit and catalytic cracker could take as long as 1 week.
Refineries with sulfuric acid alkylation units report more concern over outside service disruption than refineries with hydrofluoric acid units. The reliability of third party acid service remains uncertain.[1] A sulfuric acid plant may take from 16 to 24 hours to restart following shutdown from a rotating electricity outage. Refineries with sulfuric acid alkylation units can store anywhere from 1 day to 1 week volume of fresh or spent acid depending on storage capacity. Actual inventories and capacity available during a disruption are highly variable because shipments of fresh and spent acid are done in large batches.
Hydrogen is primarily used to remove sulfur from all refinery products, particularly gasoline and diesel fuel. Most hydrogen is produced within the refinery by the reforming unit, although several California refineries produce additional hydrogen from natural gas.
Most refineries are self-sufficient in their hydrogen supply. But several refineries report receiving hydrogen from outside the refinery. A temporary loss of outside hydrogen supply would require storing untreated product until hydrogen was restored. Longer disruptions would require cutbacks in refinery production rates. Outside hydrogen supply is not expected to be a significant refinery risk issue. The major hydrogen producer in the Los Angeles area has a cogeneration plant and is likely to be protected from disruption.
Other outside services received by refineries include:
Refiners indicate that these particular outside services are not expected to present a significant risk of disruption to refinery operations. In the event of the shutdown of the primary supplier of nitrogen or caustic to a refinery we assume that emergency supplies of nitrogen and caustic can be delivered by rail or truck before local stocks are depleted. With the shutdown of a petrochemical plant we assume that alternate disposition of the refinery byproduct can be found (e.g., burned as fuel).
[1] The Rhodia sulfuric acid regeneration plant in Martinez (San Francisco Bay area) has a 4 megawatt cogeneration unit that supplied about 90 percent of its electricity demand in 1999. Energy Information Administration, Annual Electric Generator-Nonutility, Form EIA-860B Database, 1999 (http://www.eia.doe.gov/cneaf/electricity/page/eia860b.html). The Rhodia acid plant in Los Angeles, however, does not have cogeneration capacity and would likely have to shut down during a rotating outage in its service block.
File last modified: June 12, 2001.
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