Climate Change Affects Refineries Too

European and North American oil refineries were not designed for this kind of summer heat, and the heatwave is increasingly forcing them to reduce production. Mol’s domestic refinery is still coping, but the Polish Orlen was on the verge of shutting down last week. In the US, in addition to the heat, increasingly extreme tropical storms are also threatening production. The time is approaching when gasoline prices can be pushed up not only by market processes but also by weather events, writes HVG.

The heat has been intense in Europe for weeks, especially in the Carpathian Basin, where 35 degrees Celsius is considered normal these days. Climate change is showing its teeth: so much so that the oil industry, one of its main drivers, is now in trouble because of it.

Oil refineries, like any other plant, have their temperature limits beyond which they cannot function properly. The prolonged heat exceeding 35 degrees Celsius is already at the level where the production of the facilities has to be reduced at the peak of summer tourism and agricultural work.

The production decrease is currently only a few percent, but in extreme cases, it can exceed 10 percent. Fuel prices may also increase due to the extreme heat.

According to estimates by the Australian-based Macquarie Group, European refineries were unable to utilize one million barrels per day of processing capacity last summer due to heat-related production disruptions, which is nearly 10 percent of their normal capacity. Experts at Bank of America estimate that Mediterranean countries were forced to reduce their production by almost a third.

Globally, an additional 500,000 barrels per day of capacity had to be sidelined due to the heat – this reduction occurred in the United States, in the Gulf of Mexico, which was also hit by extreme heat. Six of the largest US oil refineries operate here, specifically in the states of Texas and Louisiana, and at one point last summer, all six were shut down.

As for Hungary, namely Mol Nyrt., there is no need to worry about the heat for now. In response to HVG’s inquiry, the oil company stated: “The equipment at the Danube Refinery in Százhalombatta was designed to operate reliably at a daily average temperature between minus 20 and plus 35 degrees Celsius. Since we work with high-temperature technologies, a few degrees higher ambient temperature does not significantly affect our capacities.”

In the US, the refineries in the Gulf of Mexico have several large cooling towers and cooling water reservoirs at their disposal. But even this may not be enough in extreme heat, because the consumption of cooling equipment also increases, sometimes to the point of overloading regional power grids and forcing the sudden shutdown of entire power plants, explained Randy Hurburun, an expert at the energy market analysis firm Energy Aspects, to the news agency.

There were examples of individual unit shutdowns last summer. The heat in Texas was so intense that Valero Energy had to shut down a key cracking unit at its McKee refinery unplanned. At Exxon Mobil’s Baytown refinery, the heat caused a power outage.

In the United States, the American hurricane season, which runs from June to November, brings additional unique risks. Half of the US’s more than 18 million barrels per day of refining capacity is located along the Gulf of Mexico, an area particularly exposed to tropical storms. Moreover, this year’s season is forecast to have seven major hurricanes – with winds stronger than 178 kilometers per hour – in the region, instead of the usual three. According to the US government agency Energy Information Administration, if such a major storm hits the Gulf Coast refinery network, it could lead to a daily shortage of one million barrels of fuel, prolonged production losses, or even permanent refinery closures.