LAKEWOOD, NJ (Opis Energy Group) -- July 24, 2000 -- Despite occasional respite from high heat and humidity, Texas' tropical temperatures are expected to persist for the rest of the summer and could lead to power outages like those that hit several Texas refineries in mid-July.

And although the Northeast has not seen month-long stretches of searing heat like those that contributed to refinery power outages last summer, the region is not out of the woods yet. As reported earlier by OPIS, isolated heat bursts leading to the cranking up of air conditioners remain a possibility, potentially threatening refiners' power supply.

While the ongoing drought in the Gulf Coast region and in the Southern and Central Plains has obvious agricultural implications, it also can be an ingredient for "runaway heat," said Michael Schlacter, chief meteorologist for the consulting firm Weather 2000.

"If you have dry soil or very low ground moisture levels, there really isn't that much moisture to produce clouds -- which you might call nature's umbrella -- when the sun beats down," Schlacter said.

While occasional cool air coming down from Canada is expected to spare Dallas and Houston from unrelenting heat, temperatures on average are expected to remain above historical norms. And with the absence of cloud cover, those temperatures can feel like "sunshine under a magnifying glass," Schlacter said.

Brief power outages during the July 15-16 weekend hit several refining units in southeast Texas. Valero had a 52,000 b/d catalytic cracker go out at its Texas City refinery after a power outage that weekend. Fina was forced to cut crude runs by 50 percent at its 175,000 b/d Port Arthur facility, and units at BP Amoco's 460,000 b/d Texas City refinery were not spared from power problems either.

While electric cogeneration can serve as a buffer to such disruptions, refiners have to weigh the benefits of costly cogeneration projects against the return on other capital improvements, such as upgrading facilities to produce cleaner fuels.

Valero estimates that the Texas City cat-cracker's first week of downtime cost the company about $2 million in lost product margins. That unit has yet to be brought back on line. While the plant features cogeneration, it covers only 25-35 percent of the refinery's total power demand.

"We have evaluated installation of additional cogen production, but we felt that it was uneconomic compared to other capital investments," one Valero executive said. However, he added, "we continue to look at power reliability improvements and the value of additional cogen projects at each of our facilities."

Several refiners in the Northeast could soon be wishing they had cogeneration in place as well. For people in New York City and elsewhere breathing a sigh of relief after breezing through July with no replay of last year's brutal heat, Schlacter says: "Don't write off this summer yet."

"All you need is a little Bermuda high pressure scenario to funnel up some hot, humid air. I would not be surprised if you see some hot, muggy days on the eastern seaboard this summer," Schlacter said.

Should such a scenario strain Northeast power supply, Motiva's Delaware City refinery could enjoy interruption-free operations thanks to this year's Delaware Clean Power Project that uses coke to create steam and generate electricity. Whereas the refinery's previous cogeneration capacity left it as a net importer of about 15 megawatts per day, the refinery now is positioned to be a net exporter of about 30-40 megawatts per day.

As for the extremely hot temperatures that hit the Pacific Northwest and Southwest in June -- reportedly affecting some refinery operations -- the rest of the summer should be less problematic.

Those high temperatures were due in part to the so-called "Santa Ana Winds" that downslope from the Rocky Mountains into West Coast regions. Air from the Rockies compresses and warms up as it sinks, exacerbating hot weather conditions. But the extensive downsloping witnessed earlier this summer is not expected to return to California or other parts of the West Coast anytime soon.

- Brad Addington (baddington@opisnet.com)

Copyright 2000, Oil Price Information Service.

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