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Electricity Shortage in California: Issues for Petroleum and Natural Gas Supply |
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3. Petroleum Refineries
A. SummaryCalifornia refineries are concentrated in three areas (Figure 3-1): the San Francisco Bay Area, Los Angeles, and north of Los Angeles (Santa Maria/Bakersfield). Each of these refineries is served by one of three electric utilities: Pacific Gas and Electric (PGE), Southern California Edison (SCE), and the Los Angeles Department of Water and Power (LADWP) (Figure 3-2).
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Until early this year California refineries were considered exempt from rotating outages because they are connected to the electricity grid at the transmission voltage level rather than the lower distribution voltage level and were not included in rotating outage procedures by the California Public Utilities Commission (CPUC). In April 2001, the CPUC ruled that utilities must include transmission level customers in rotating outages.[1] Excluded from this rule are essential use customers and customers who supply power to the grid in excess of their load at the time of an electrical outage. Refineries in the SCE and PGE service areas have been assigned blocks for rotating electricity outages. These refineries are currently exposed to complete shutoff from the electricity transmission grid on very short notice. The direct exposure of these refineries to rotating outages ranges from minimal to severe.
Refineries may petition the CPUC for exempt status if they can demonstrate that being subject to rotating outages presents a significant danger to public health and safety.[2] Decisions on exemption applications are expected to be ruled on by the CPUC by August 2, 2001. Four California refiners (Equilon Enterprises LLC, ExxonMobil Corp., Tosco Corp., and Valero Energy Corp.) have been reported to have filed petitions with the CPUC seeking exemption from rotating outages.[3] Chevron Corp., however, in a letter to California Governor Gray Davis, said it would not apply for exempt status because it "will never operate its facilities in a manner that jeopardizes the health or safety of its employees or neighbors," but would be "forced to operate our refineries at less than full capacity."[4] On June 8, 2001, Governor Davis urged the CPUC to treat refineries and ancillary facilities as essential-use customers, exempt from rotating outages, because the fuels they provide are critical to the public health and safety.[5]
About one-fourth of the refining capacity in California is protected from electrical outages, either because of sufficient cogeneration capacity within the refinery or because it is in an electric utility service area that is not expected to be subject to rotating electrical outages (i.e., LADWP). The rest of the refineries could be forced to either reduce operating rates or shut down completely during an electricity outage if it should affect their supply of electricity.
About 40 percent of the refining capacity has some cogeneration capabilities but not enough to keep the refinery operating at full rates. Operating rates at these refineries would need to be reduced by up to 30 percent or selected units shut down in order to continue operating during an electrical outage. Returning to full production rates can take up to several days (and possibly longer if there is equipment damage). Consequently the extent of loss of production volume will be greater than the period of the electrical outage.
Finally, up to 27 percent of the refining capacity is expected to be forced to shut down completely during a rotating electrical outage should it occur in their block. It takes a refinery 1 to 2 weeks to return to full operating rates following a forced emergency shutdown. If electricity outages were to hit one of these refineries frequently, the refinery might choose to remain down for extended periods of time rather than undergo the high costs of repeated emergency shutdowns and restarts.
Unless alternative programs to rotating outages can be implemented, such as exemptions or the California Public Utilities Commission's proposed Optional Binding Mandatory Curtailment (OBMC) program discussed below, the potential loss of petroleum product supply in California could be unprecedented should rotating outages occur at refineries.
This refinery analysis is based on a mail survey conducted by the California Energy Commission in early May 2001, with a follow-up telephone survey by the Energy Information Administration. The survey covered 13 of the 24 operating California refineries. The 13 refineries participating in the survey represent about 92 percent of the crude oil distillation capacity in the State and about 98 percent of the gasoline and diesel fuel production capacity.
California refineries are classified in Table 3-1 below in 1 of 3 categories of exposure to rotating electrical outages based on the refiners' responses to the survey:
Ten refineries are not classified in Table 3-1 because they were not included in the refinery mail and telephone surveys conducted by the California Energy Commission and the Energy Information Administration. These refineries represent about 8 percent of the State's crude distillation capacity and produce only small volumes of gasoline and diesel fuel and are primarily asphalt or lubricating oil producers. However, one important product of these refineries is unfinished oils, which are processed at the larger complex refineries into gasoline and other clean fuels.
| Table 3-1. California Refineries and Exposure to Rotating Electricity Outages | ||||||
| Company | Location | Operating Crude Oil Atmospheric Distillation Capacity Jan. 1, 2000 (mbpsd) |
Electric Utility Service Area |
Estimated Electricity Demand (1) (mw) |
Cogeneration Capacity (2) (mw) |
|
| High Exposure | ||||||
| ExxonMobil | Torrance (Los Angeles) | 160 | SCE | 94 | 42 | |
| Tosco | Carson (Los Angeles) (3) | 137 | SCE | 26 | 0 | |
| Valero | Benicia (San Francisco Bay) | 135 | PGE | 50 | 0 | |
| Equilon | Bakersfield | 67 | PGE | 35 | 0 | |
| Tosco | Santa Maria (4) | 44 | PGE | 6 | 5 | |
| Subtotal | 543 | (27% of total Calif. distillation capacity) | ||||
| Moderate Exposure | ||||||
| Chevron | El Segundo (Los Angeles) | 273 | SCE | 108 | 126 (2) | |
| Chevron | Richmond (San Francisco Bay) | 240 | PGE | 135 | 120 | |
| Equilon | Martinez (San Francisco Bay) | 162 | PGE | 105 | 90 | |
| Equilon | Wilmington (Los Angeles) | 100 | SCE | 58 | 60 (2) | |
| Subtotal | 775 | (39% of total Calif. distillation capacity) | ||||
| Low Exposure | ||||||
| BP | Carson (Los Angeles) | 260 | SCE | 82 | 393 | |
| Ultramar | Golden Eagle (San Francisco Bay) | 106 | PGE | 90 | 100 | |
| Ultramar | Wilmington (Los Angeles) | 79 | LADWP | 37 | 0 | |
| Tosco | Rodeo (San Francisco Bay) (4) | 77 | PGE | 40 | 48 | |
| Tosco | Wilmington (Los Angeles) (3) | 0 | LADWP | 47 | 54 | |
| Subtotal | 522 | (26% of total Calif. distillation capacity) | ||||
| Undefined | ||||||
| Paramount | Paramount (Los Angeles) | 48 | ||||
| Kern | Bakersfield | 25 | ||||
| Edgington Oil | Long Beach (Los Angeles) | 25 | ||||
| San Joaquin Refg. | Bakersfield | 15 | ||||
| Huntway Refining | Benicia (San Francisco Bay) | 13 | ||||
| Greka Energy | Santa Maria | 10 | ||||
| Lunday Thagard | South Gate (Los Angeles) | 8 | ||||
| Huntway Refining | Wilmington (Los Angeles) | 6 | ||||
| Tenby | Oxnard (Los Angeles) | 5 | ||||
| Golden Bear | Bakersfield | 0 | ||||
| Subtotal | 155 | (8% of total Calif. distillation capacity) | ||||
| Notes: | ||||||
| (1) Estimated electricity demand represents average demand. Peak demand is generally not significantly different from average demand. Estimated demands were based on reported 1999 average demand (see sources below) or processing capacity installed on January 1, 2000. Current electricity demand may be different because of changes in processing rates or refinery configurations. (2) Actual electricity available from cogeneration may be less than capacity where cogeneration operating rates are limited by refinery steam demands. For example, the Chevron El Segundo refinery purchased an average 12 percent of its total electricity requirement from SCE in 1999, and the Chevron Richmond refinery purchased an average 8 percent of its total electricity requirement from PGE in 1999. Refiners were not asked in the survey if it was possible to operate their cogeneration units in excess of refinery steam requirements (i.e., vent excess stem to the atmosphere) in order to satisfy all of their electricity needs. (3) The Tosco Carson and Tosco Wilmington refineries are an integrated unit with crude and heavy oil processing at Carson and refined product upgrading at Wilmington. The Wilmington plant could continue operations from inventories and purchased feedstocks in the event of a Carson plant shutdown. (4)The Tosco Santa Maria refinery produces intermediate feedstocks for further processing at the Tosco Rodeo refinery. The cogeneration capacity at this refinery is not expected to be sufficient to maintain operation during an electrical outage. | ||||||
| Characterization of Exposure: | ||||||
| High exposure - complete emergency shutdown of refinery | ||||||
| Moderate exposure - reduction in operating rates and/or selective shutdown of operating units | ||||||
| Low exposure - rotating electrical outages unlikely or uninterrupted operation if outage occurs | ||||||
| Units key: | ||||||
| mbpsd - thousands of barrels per stream day | ||||||
| mw - megawatts | ||||||
| Electric utility service area: | ||||||
| LADWP - Los Angeles Department of Water and Power | ||||||
| PGE - Pacific Gas and Electric | ||||||
| SCE - Southern California Edison | ||||||
| Sources: | ||||||
| • Categorization: Based on responses to the question "Can the refinery keep operating if your rotating outage block is taken off-line?" on the California refinery survey, May 2001. | ||||||
| • Operating Crude Oil Atmospheric Distillation Capacity: Energy Information Administration, Petroleum Supply Annual 1999, Volume 1, DOE/EIA-0340(99)/1 (Washington, DC, June 2000), Table 38 (http://www.eia.doe.gov/oil_gas/petroleum/data_publications/petroleum_supply_annual/psa_volume1/psa_volume1.html). | ||||||
| • Cogeneration Capacity: California Energy Commission, Database of California Power Plants (http://www.energy.ca.gov/database/index.html) and Energy Information Administration, Annual Electric Generator-Nonutility, Form EIA-860B Database, 1999 (http://www.eia.doe.gov/cneaf/electricity/page/eia860b.html | ||||||
| • Estimated Electricity Demand: Electricity consumption reported in Form EIA-860B referenced above or estimated from reported processing unit capacities and unit electricity consumption reported in Table 3-2 below. | ||||||
Refineries in the high exposure category represent about 27 percent of the total California crude oil distillation capacity, about 24 percent of the gasoline production capacity, and about 12 percent of the distillate fuel oil production capacity.
Refineries in the high exposure category will have to perform an emergency shutdown of all of their operations in the event of a rotating electrical outage in their service block. A refinery required to undergo an emergency shutdown will take from 7 to 14 days to return most operating units to full normal operation.[6] The 7 to 14 days estimate for refineries to return to normal service assumes there was no equipment damaged during the emergency shutdown. Unfortunately, the very short notice (possibly only minutes) of a rotating electrical outage and the emergency shutdown procedure a refinery must undergo significantly increases the potential for equipment damage. Fluid coking units can require a complete turnaround following an emergency shutdown. A turnaround on a coker unit may take up to 6 weeks because of the time required to remove the solid petroleum coke from inside the equipment. Refiners indicate that a safe controlled refinery shutdown would require between 4 and 12 hours advance notice. If rotating outages are expected to be frequent then it is conceivable that these refineries would remain down for extended periods of time rather than undergo the high costs of repeated emergency shutdowns and restarts.
Electricity outages in California during the first 5 months of 2001, have occurred in either Northern California or have been statewide (Table 3-2). If rotating outages should occur only in Northern California, only 1 refinery in the high exposure category (representing about 7 percent of the total California crude distillation capacity) would be exposed to a forced shutdown. If rotating outages should occur only in Southern California, 4 refineries in the high exposure category (representing about 20 percent of the total California crude distillation capacity) would be exposed.
| Table 3-2. History of Electrical Outages in California, 2001 | |||
| Date | Start Time | Outage (MW) | Area Affected |
| 5/8 | 3:12 pm | 400 | Statewide |
| 5/7 | 4:45 pm | 300 | Statewide |
| 3/20 | 9:20 am | 500 | Statewide |
| 1/21 | 20 minute disruption due to transmission line failure | Northern California | |
| 1/18 | 9:50 am | 1,000 | Northern California |
| 1/17 | 11:40 am | 500 | Northern California |
| Source: California Independent System Operator, Power Watch 2000, http://www.caiso/com/newsroom/pw2000.html | |||
The California Public Utilities Commission has proposed an Optional Binding Mandatory Curtailment (OBMC) program, which allows facilities to avoid complete electricity outages in return for a firm reduction in electricity demand during every rotating outage that occurs in the utility service area. If refineries choose to participate in this program they may be required to reduce electricity consumption by up to 15 percent below the previous 10-day average.[7]
To achieve the 15-percent reduction a refiner may have two options. First the refinery may install emergency electricity generators to make up the 15-percent loss during rotating outage periods. Second, without backup generating capacity a refinery must reduce operating rates by as much as 30 percent (the relationship between electricity demand and operating rates is nonlinear) and return to full operating rates immediately following the outage in order to maintain a high 10-day average on which to base their load reduction. But there would still be a significant loss of production volume where the refineries must reduce operating rates during every rotating outage that occurs anywhere in the utility service area.
One refiner in the high exposure category has already applied for participation in the OBMC program and for connection of emergency backup generators. However, neither the application for participation in the OBMC program nor the connection of the backup generators had been approved as of mid-June.
Refineries that are classified as having a moderate exposure to rotating outages in Table 3-1 above have cogeneration capacity but are still net purchasers of electricity. Moderate exposure refineries are expected to closely monitor weather forecasts and reduce overall operating rates during periods of forecast high temperatures in order to avoid emergency actions associated with rotating outages. In the event of a forced emergency reduction in electrical demand during a rotating outage these refineries may be able to shut down individual processing units rather than the entire refinery.
Table 3-3 below lists the electricity demands of individual units within a refinery. The three process units that consume the most electricity are:
Because these units generally run at maximum capacity during the summer months, the loss of any of these units would reduce the volume of diesel fuel or motor gasoline supply. Catalytic hydrocrackers produce California Air Resources Board (CARB) reformulated gasoline and diesel fuel. Product from the alkylation unit is needed for CARB gasoline.
| Table 3-3. Electricity Demand by a Hypothetical 100,000 barrel per day California Refinery | ||||||
| Hypothetical California Refinery Unit Capacity (bpsd) |
Electricity Demand (kwh per bpsd) |
Total Electricity Demand (kwh per day) | ||||
| Atmospheric Crude Oil Distillation | 100,000 | 0.5 | 50,000 | |||
| Vacuum Distillation | 55,873 | 0.3 | 16,762 | |||
| Delayed Coking | 19,578 | 3.6 | 70,482 | |||
| Fluid Coking | 4,735 | 13 | 61,554 | |||
| Visbreaking | 240 | 0.5 | 120 | |||
| Catalytic Cracking (fresh feed) | 32,323 | 1 | 32,323 | |||
| Catalytic Hydrocracking | 23,972 | 10 | 239,723 | |||
| Catalytic Reforming (low pressure) | 8,961 | 1 | 8,961 | |||
| Catalytic Reforming (high pressure) | 11,386 | 1 | 11,386 | |||
| Hydrotreater (heavy gas oil) | 30,431 | 1.3 | 39,561 | |||
| Hydrotreater (naphtha) | 23,569 | 2 | 47,138 | |||
| Hydrotreater (distillate) | 20,668 | 1.7 | 35,136 | |||
| Hydrotreater (other/resid) | 6,536 | 1.4 | 9,150 | |||
| Fuel Solvents Deasphalting | 2,401 | 2 | 4,802 | |||
| Alkylates (sulfuric acid) | 7,847 | 11 | 86,314 | |||
| Aromatics | 72 | 0.83 | 60 | |||
| Asphalt & Road Oil | 3,577 | 1.5 | 5,365 | |||
| Isomerization (isobutane) | 1,177 | 1 | 1,177 | |||
| Isomerization (C5s) | 3,434 | 1 | 3,434 | |||
| Lubricants | 1,566 | 0.8 | 1,245 | |||
| Sulfur (short tons/day) | 193 | 40 | 7,705 | |||
| Total | 732,397 | |||||
| • The hypothetical California refinery is derived from total unit capacities reported in Energy Information Administration, Petroleum Supply Annual 1999, Volume 1, DOE/EIA-0340(99)/1 (Washington, DC, June 2000), pp. 84-87 and 98-99, scaled to 100,000 barrels per stream day atmospheric distillation capacity (http://www.eia.doe.gov/oil_gas/petroleum/data_publications/petroleum_supply_annual/psa_volume1/psa_volume1.html).
• Total refinery electricity demand is greater than the electricity demand estimated from reported refinery process unit capacities and process unit electricity demands reported above. An approximation of total refinery electricity consumption is calculated equal to 13,717 + 1.171 * sum of process unit electricity demands. Units key: bpsd - barrels per stream day kwh - kilowatt hours Sources: Maples, Robert E., Petroleum Refinery Process Economics (PennWell Books: Tulsa, OK, 1993). Hydrocarbon Processing, Refining Processes 2000 (Gulf Publishing Co.: Houston, TX., November 2000) pp.88 - 142. | ||||||
Although we do not expect the refineries classified as moderate exposure to be forced to shut down their entire operations we do expect that average production rates at these refineries will be less than their capacity over the summer months due to operating at reduced rates during warm weather or from the shutdown of selected operating units.
Coordination between the electric utilities and refineries that are moderately exposed to rotating outages is also important for reducing the risk of equipment damage and minimizing lost production volume that could occur from forced refinery processing rate reductions in the event of sudden unannounced blackouts. For example, refineries could reschedule their operations, change their use of feedstock and product storage, and cut back production over the planned periods to minimize the impact on their operations during rotating outages - particularly if they already have significant cogeneration capacity. Further, the addition of backup generators when the refineries are nearly self-sufficient could provide supplemental power for nearly uninterrupted operations.[8]
[1] California Public Utilities Commission, Decision 01-04-006, Section 6.1.2, "Include Most Transmission Level Customers in Rotating Outages" (Sacramento, CA., April 3, 2001), pp. 46-48.
[2] The deadline for applications was June 4, 2001. Late applications will be accepted by CPUC until June 15, 2001, and will be considered by CPUC at a later time. California Public Utilities Commission Announcement, "Public Health and Safety Rotating Outage Exemption Application Process" (Sacramento, CA., May 21, 2001) (http://www.rotating-outages.com/)
[3] Richard Valdamis, "California Refiners Say May Drop Power If Output Cut," Reuters (New York, NY, June 5, 2001).
[4] Letter from David J. O'Reilly, Chairman and Chief Executive Officer Chevron Corp., to California Governor Gray Davis, June 1, 2001.
[5] California Office of the Governor Press Release, "Governor Davis Sends Letter Urging That Refineries Be Exempt From Rotating Outages" (Sacramento, CA., June 8, 2001).
[6] Refiners were asked in the survey, "How long would it take to rebalance the refinery and continue operations at normal production levels following an emergency shutdown of the facility? The assumption for this question is that no damage has resulted from the shutdown." Refiners generally gave a range of estimated time to restart and return to normal operating rates. The 7 to 14 days represents the median of the low and high estimates provided by refiners.
[7] California Public Utilities Commission, Decision 01-04-006, Section 5.8, "Optional Binding Mandatory Curtailment Program" (Sacramento, CA., April 3, 2001) pp. 37-40. Optional Binding Mandatory Curtailment plans: Southern California Edison, Cal. PUC Sheet No. 28821-E*; and Pacific Gas and Electric Co., Cal. P.U.C. Sheet No. 18065-E*.
[8] Refiners were asked in the survey if they "have plans for back-up generation capability for this summer?" Only one moderate exposure refinery had installed some backup capacity (1 MW). However, this backup capacity is not expected to be sufficient for the refinery to maintain normal operating rates during rotating outages.
File last modified: June 12, 2001.
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