May 2022

Trends and Resources

Business Trends: Insights from the 2020 Worldwide Fuels Refinery Performance Analysis

The author’s company recently completed its data analysis for the 2020 Worldwide Fuels Refinery Performance Analysis (Fuels Study).

Achacoso, M., HSB Solomon Associates LLC

The author’s company recently completed its data analysis for the 2020 Worldwide Fuels Refinery Performance Analysis (Fuels Study). With its inception in 1981, this biennial survey—representing up to 85% of the worldwide refining capacity—generates a rich and unique collection of operating data and insight. Of particular interest is the impact that COVID-19 has had on the worldwide refining industry. This article shares general insights and observations on the 2020 pandemic impacts and decisions that will potentially shape the future of refining.


Worldwide utilization was down approximately 10% in 2020 as refiners adjusted run rates to match lower transportation fuels demand; however, Europe fared better than other regions around the world in terms of overall utilization (FIG. 1). It is interesting to note that utilization impacts from the pandemic were more severe than the 2008 financial crisis, as indicated by the greater destruction of transportation fuel demand.

FIG. 1. Refining utilization rates by region.
FIG. 1. Refining utilization rates by region.


Net cash margin was impacted by both crude pipeline availability and transportation fuel demand destruction. While all regions around the world had lower profitability in 2020 vs. 2018, refiners in the Eastern Hemisphere were particularly impacted. FIG. 2 shows the hardest hit regions were Russia, followed by Western Europe, the Middle East and Asia-Pacific. In the U.S., inland refiners saw their crude cost advantage erode as pipeline capacity became available due to lower refinery utilization.

 FIG. 2. Regional net cash margin changes.
FIG. 2. Regional net cash margin changes.

Capital expenditures

Worldwide capital investment was 16% lower in 2020 vs. 2019 as refiners attempted to bolster cash flow. At 35%, the U.S. and Canada experienced the largest reduction vs. other regions. The lagging effect from this reduction in capital investment is a reduction in demand for the construction industry, which must be able to restart quickly and deal with supply chain issues as refiners begin spending capital as margin outlooks improve.

In the future, 25% of the Fuels Study participants plan to increase their capital spending by 50%, mainly in energy conservation. The author’s company believes these refiners appreciate that being more energy efficient will not only reduce carbon emissions but also positively impact maintenance and personnel costs.

Operations staffing

More than half of the study participants maintained normal shift and relief schedules. To minimize personnel exposure, mitigation measures included the following:

  • Restricted access to control rooms
  • Minimizing extra operators on shifts
  • Isolating central control.

Many operators retrained/qualified members of the non-operations workforce for backup contingency to work processing units in case an insufficient number of operators were unavailable due to COVID-19. Ten percent of the participants needed to use non-operations personnel to alternately staff units. Some changed their shift schedules (moving from a 12-hr to an 8-hr shift) to allow childcare flexibility since many schools closed and went to online formats. Several participants implemented technology to allow electronic communication between operators in the field and support staff to minimize face-to-face interactions.

In the future, one-third of participants plan to improve the level of field automation to reduce the minimum operating staff needed for safe operations. While automation cannot totally replace human operators, it can eliminate recurring tasks performed by operators on processing units, allowing the remaining staff to focus on safe, environmentally compliant, reliable and profitable operations.

Maintenance staffing

More than half of the study participants changed maintenance schedules, driven by the need to reduce exposure and perform critical activities only. Adjustments included the following:

  • Staggering report times
  • Putting technicians on shifts
  • Scheduling cohorts 7 d on/off
  • Switching between a 3 d on/4 d off and 4 d on/3 d off work week.

Two-thirds of participants reduced their contractor staffing levels due to a reduction in base maintenance activities and lack of contractor availability. Staffing schedules were adjusted to mirror company maintenance resources. Contractor costs increased due to disinfection, idle/waiting times and increased personal protective equipment.

In the future, nearly half of the study participants plan to reduce their reliance on non-turnaround maintenance contractors, primarily driven by setting specific limits for cost reduction. Some respondents plan to use nested non-turnaround contractors during turnarounds.

Non-field personnel

Nearly all study participants allowed their non-field personnel and support staffs to work remotely from home or work alternative schedules. Only 10% are re-evaluating consolidating their general and administrative personnel, outsourcing to fewer countries. Many are increasing their information technology resources to support online communications.

Health and safety

Nearly all study participants plan to update their response measures for future pandemics as dictated by their local/national governments. Risk mitigation examples include:

  • Requiring contractors to submit their own pandemic response plans
  • Allowing employees to self-screen temperature checks at site entrances
  • Using temporary buildings and structures to enable social distancing
  • Wearing masks indoors
  • Staggering lunch times
  • Enacting mandatory quarantine and COVID testing upon return from travel to high-risk regions.

Maintenance turnarounds

The pandemic forced refiners to rethink their traditional maintenance turnaround strategy. Refiners could have enacted any of the following strategies:

  1. Defer shutting down units for maintenance due to negative cash margins, worker health concerns and equipment delivery delays.
  2. Shutdown units for turnaround due to a pressing need to address mechanical integrity and process safety concerns.
  3. Potentially take a longer time to execute turnarounds to manage worker health concerns and negative cash margins.

Most turnarounds are scheduled to occur at intervals of 4 yr–6 yr between downtimes. The author’s company compared cumulative turnaround work hours to averages witnessed in 2015–2016. Most regions had a decrease in total turnaround work hours except for the Middle East and Central/Southern Europe.

FIG. 3. focuses on turnaround work hour patterns in the U.S. and Canada. Cumulative work hours in 2020 trended in line with previous averages for 1Q 2020. Work hours plateaued in 2Q 2020 when COVID lockdowns were enacted around the March timeframe. However, we did not see the normal increase in fall season work hours after the high gasoline demand for the summer driving season was over.

 FIG. 3. U.S. and Canada turnaround work hours.
FIG. 3. U.S. and Canada turnaround work hours.

This data suggests that more refiners chose turnaround deferral. However, what are the longer-term impacts of this strategy? Would postponing turnarounds lead to more equipment breakdowns and unit downtimes as refiners attempt to stretch intervals another 1 yr–2 yr? Would these unplanned events happen during times of higher margins, leading to higher lost opportunity for increased profitability?

Operational availability is the author’s company’s metric for measuring when a unit is available to run regardless of economic conditions. FIG. 4 shows historical operational availability from 2010–2020. This data shows a mixed result for each region. Many regions with lower operational availability had more unplanned downtimes. Were these unplanned downtimes caused by lower availability of maintenance personnel and resources due to the pandemic? Some regions experienced lower unplanned downtimes. Was this because running at lower utilization put less stress on the equipment?

FIG. 4. Regional operational availability, 2010–2020.
FIG. 4. Regional operational availability, 2010–2020.

This variability indicates the need for additional data. The 2022 Fuels Study will collect operational and turnaround data for both 2021 and 2022, shedding light on which turnaround strategy was the best option (i.e., should refiners have deferred their turnarounds or not).

Potential refinery closures

The author’s company’s cost of transportation fuels (CTF) metric gauges a refinery’s survivability. CTF is the breakeven price for a refiner to produce a barrel of transportation fuel. This breakeven price includes net raw material cost and operating expense. A refinery’s location may have an impact on CTF for access and logistics to deliver cheaper raw materials. Regions with higher energy prices also drive refiners to lower their non-energy costs to remain competitive. Refineries with a higher CTF are at risk of going out of business. FIG. 5 shows the worldwide CTF distribution, including a refinery closure peer group showing the average CTF position for refineries in the study that announced either closure or conversion to renewables production.

FIG. 5. Worldwide CTF with refinery closure peer group.
FIG. 5. Worldwide CTF with refinery closure peer group.

Refineries operating on the left side of the curve (a lower CTF) can go on the offensive, using their lower breakeven cost plus advantaged freight rates to transport products. Refineries with a higher CTF in those markets must go on the defensive to remain profitable. Refineries operating in the range of the closure peer group are at risk for closure, conversion or divestment to another buyer. Demand destruction may be the accelerator for additional refinery capacity going offline. The author’s company’s proprietary database modela evaluates regional product demand and trade flows to calculate at-risk capacity to return regional utilization to 80% as product demand decreases. Under a 2°C temperature increase scenario case, the author’s company estimates that 15%–20% of global refinery capacity is at risk by 2030, with an additional 20% of capacity at risk by 2040.


Net-zero emissions goals will continue to transform the refining industry. The author’s company’s proprietary metricb accounts for most of a refinery’s Scope 1 and Scope 2 greenhouse gas (GHG) emissions. The metric has a direct link to refinery energy efficiency. As refiners ramp up run rates, increased utilization from better reliability will improve energy efficiency. When formulating a sustainability strategy, refiners should agree on a percentage reduction for GHG emissions in carbon dioxide equivalent (CO2e), which can translate to a concrete energy efficiency goal. If strategic investments are required to meet this goal, an acceptable rate of return can be generated using process constraint removal and non-energy operating expense reduction credits.


he pandemic has had significant impacts on utilization, profitability and cash flow for the refining industry, and has forced refiners to rethink how to staff and maintain their facilities in a demand destruction environment. The resulting demand destruction and sustainability initiatives point to additional rationalization of refining capacity in the next several years. Participation in the 2020 Fuels Study allows participants to shape their future strategies to deal with lower (and already declining) transportation fuels demand, which the pandemic has likely hastened. HP


  a Solomon’s World Oil Refining Logistics and Demand (WORLDâ) Model

  b Solomon’s Carbon Emissions Index (CEI™)

The Author

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