Environment & Safety Gas Processing/LNG Maintenance & Reliability Petrochemicals Process Control Process Optimization Project Management Refining

Colorado refinery outage causing increased fuels pricing

The only petroleum refinery in Colorado shut down in late December after sustaining damage from extremely cold weather, and it is expected to remain offline for months to repair, the refinery owner and operator, Calgary-based Suncor, stated. The refinery outage may tighten the supply of gasoline and diesel in Colorado and, more broadly, the Rocky Mountain region, leading to higher retail prices for both. From the end of December to February 20, the average retail gasoline price increased 51% in Colorado and 27% in the Rocky Mountain region, compared with a 9% increase in the United States overall.

On December 24, Suncor shut down its 103,000-bpd oil refinery in Commerce City, Colorado, just outside of Denver. Suncor said that extreme cold weather earlier in the month had damaged equipment and that the repairs would require a full shutdown of the facility and delay operations until the end of the first quarter of 2023.

Since December 26, the average retail gasoline price in Colorado increased by $1.39 per gallon (gal) to $4.10/gal, as of February 20. According to the US EIA's Refinery Capacity Report, the Commerce City refinery is the only active refinery in Colorado, the most populous state in the Rocky Mountain region. It is estimated that Colorado accounted for 41% of total gasoline sales and 25% of total distillate sales (including both jet fuel and diesel) in the Rocky Mountain region in 2021.

The Commerce City refinery outage means the region must draw from existing regional inventories and transfer petroleum products from other out-of-state refineries. Colorado has greater pipeline connectivity to other U.S. regions than other states in the Rocky Mountain region. So, transfers from the Midwest and Gulf Coast should minimize withdrawals from regional inventories.

Rocky Mountain inventories of gasoline and diesel fuel started the year well below the five-year average. Existing low inventories present an additional source of uncertainty for prices in the Rocky Mountain region because withdrawals are likely to continue until production at Commerce City resumes. Higher prices may stimulate increased refinery operations in Utah and Wyoming to compensate for the outage and backfill production that would have come from Commerce City.

Related News

From the Archive



{{ error }}
{{ comment.name }} • {{ comment.dateCreated | date:'short' }}
{{ comment.text }}