The US is looking at "some opportunities" to help re-open refineries that have been shut within the past decade, secretary of energy Chris Wright said today.
The administration is engaging with every refinery that has been shut in the last 10 years "to find what's the most practical one to get a refinery up and running" to increase fuel production and lower prices, he said on the sidelines of an event in Houston, Texas.
The talks include the most recent US refinery to shut down, Valero's 145,000 b/d Benicia refinery in California, but "that's a tough challenge" because of the difficult business environment in that state, Wright said.
Two other large US refineries have shut within the past two years — Phillips 66's 139,000 b/d Los Angeles refining complex and LyondellBasell's 264,000 b/d refinery in Houston, Texas.
The US administration's efforts to possibly restart refineries come as President Donald Trump seeks ways to reduce fuel prices ahead of closely contested midterm elections. Diesel and gasoline prices have soared because of global supply shortages caused largely by the US-Iran war.
A White House official told Argus last week that the administration is working with "many refineries" to award funds for expansions through the 1950 Defense Production Act.
Wright said Tuesday that the expansions would tap into a $1bn fund the Republican-led Congress created through a tax and energy law passed last year. He also said the projects would be "heavily co-funded" with industry.
Only one of the expansions has been announced, although details remain scarce. US vice president JD Vance said last week that Delek's 74,000 b/d refinery in Tyler, Texas, would get Defense Production Act funds for an unspecified expansion.
Wright said Tuesday that Delek "had a very attractive proposal" to increase throughput at the refinery "to a meaningful amount".
The administration is seeking proposals from more companies that can expand refining capacity as quickly as possible and as cost-effectively as possible, he said.
Refinery expansions typically are planned many months to years in advance and take equally long to complete, depending on the scope. US refineries regularly make small increases in production capacity and product slates through annual maintenance and occasional large-scale projects.
US refiners have been running at high rates this year to fill global supply gaps left by what was a de facto closure of the strait of Hormuz because of the war, taking advantage of the high prices and reporting bumper profits in the second quarter with margins doubling from a year earlier.
The Defense Production Act gives the president special powers to require domestic industries to prioritize certain activities related to national defense, such as production of military equipment or, as during the Covid-19 pandemic, to produce medical equipment.
In March, Trump used the law for the first time to force the restart of a pipeline in California, which allowed US independent Sable Offshore to start sales of crude in that region.
Trump also signed five "presidential determinations" earlier this year that invoked the Defense Production Act to support the development of oil production, pipelines, refineries, LNG export terminals, coal-fired power plants and other energy infrastructure.
