US refiners spread out heavy maintenance plans

Efforts to slow the spread of Covid-19 will lead to heavier US refinery maintenance over the next year.

US refiners might normally use production slowdowns forced by lower demand in the spring to tune up equipment for a recovery. But precautions to slow the spread of Covid-19 have complicated work that draws hundreds or thousands of contractors to refinery sites roughly every five years.

Turnarounds involve maintenance that shuts and overhauls major refining units, usually on a four- to six-year cycle. Refiners plan this maintenance just ahead of the transition to summer-specification gasoline — in February through April — or following the peak driving season in October and November.

This work demands a surge of specialists, adding contractors and workers from the company's other refineries to safely bring down and restart the equipment. Stress on equipment during turnarounds and the influx of workers make them one of the more dangerous periods at a refinery.

US refiners paused projects to conserve cash and reduce staffing levels at refinery sites as the response to the Covid-19 pandemic limited travel and discouraged crowds. But the work must be done.

"People who are deferring turnarounds, and doing a lot of that, at some point, that does catch up," Valero chief operating officer Lane Riggs said on a quarterly earnings call. "At some point you have to take a turnaround."

Marathon Petroleum deferred unspecified work into next year but has continued maintenance at some refineries. Phillips 66 completed a heavy first quarter of turnaround work and unplanned maintenance before communities imposed the broadest travel and gathering restrictions. The refiner delayed remaining projects.

Some refiners plan to catch up on work in the second half of this year, or early 2021. Matrix Service, contractor for a number of services including turnaround work, expected work to resume in a later quarter, though at potentially different scopes. Slowdowns affected the company's ability to pass on costs and affected the turnaround business for the most recent quarter, chief executive John Hewitt told analysts last month.

"We are already hearing about plans to start bringing that back here over the next couple of quarters, so no real concerns there," Hewitt said.

Refiner HollyFrontier said it is looking ahead to a very heavy maintenance schedule next year. Others, such as PBF, rolled scheduled work further into the future. Maintenance scheduled at two refineries for the second half of this year moved into 2021, and the company planned to further push work scheduled for next year into 2022.

"We do not like to do too many turnarounds in any given year," PBF chief executive Tom Nimbley said on a quarterly earnings call.

The work will look different when it resumes. Limiting the number of personnel on site at a given time may extend maintenance. Refineries have imposed temperature checks, staggered work and required face masks — fire resistant, suitable for industrial work. The conditions have meant breaking up eating, meeting and parking areas. Contractors that send workers all over the world have limited travel to manage infection risks. And refineries may keep employees on the same shifts, much like other businesses, to limit the spread and ensure other workers are available in the event of a Covid-19 case.

By Elliott Blackburn