October 20, 2018
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How the Irving refinery explosion could affect Maine fuel prices and availability

Courtesy of Jill Lanteigne
Courtesy of Jill Lanteigne
A plume of smoke rises over Irving Oil's refinery in Saint John, New Brunswick, where residents reported an explosion at the facility on Monday morning.

The effect of the explosion Monday morning at an Irving refinery in Saint John, New Brunswick, on gas and heating oil prices remains unknown, although the Governor’s Energy Office in Maine is watching developments closely because the state relies heavily on that plant for energy.

“We are trying to find out what the extent of the damage is,” said Angela Monroe, director of the energy office. “I don’t know exactly how much oil and gas we get from that plant, but it is very significant. We don’t know yet whether there is an impact.”

Monroe said the state has its Canada ombudsman working now to get information on the extent of the damage and how soon it might be repaired. She said Irving may have contingency plans to keep the energy supplies flowing.

She said she expected to have more information Tuesday afternoon.

Irving posted an update on its website Tuesday, saying the company “can confirm that the refinery as a whole is safe and the specific site of the incident is isolated and contained … we are currently planning to have our turnaround team back on site this evening for the night shift. Our plans for returning to full turnaround mode will be discussed at that time.”

Whether and how the explosion will affect heating and gasoline prices in New England will be determined by the incident’s location in the refinery and its repair, information that should be released in the next day or so, a U.S. Energy Information Administration analyst said.

“Where it happened in the refinery and how long it will take to fix it are two key pieces of information to look for,” said Mason Hamilton, a petroleum analyst with the EIA, which collects data on energy.

An Irving spokeswoman was not immediately available for comment.

“If Irving is affected for a long time, the market will adjust. New England will not run out of fuel, but will bring supplies from Europe, and that can impact prices,” he said.

New England doesn’t just rely on Canada for fuel and gas. It also has energy barged from New York and shipped from refineries in Europe.

“If the outage at Irving lasts a long time, that’s where the alternatives come in,” Mason said. “Depending on what specific unit is impacted at Irving — heating fuel or gasoline — will swing the price one way or the other.”

He noted that Irving already had at least parts of the plant shut down for maintenance, a common practice during the shoulder season between fall and winter. When a plant is down for maintenance, the company typically makes alternative plans to keep its customers supplied during that time.

He said it makes sense that the incident happened at some part of the refinery that was down for maintenance. There would be a bigger price impact if there was a sudden, unplanned refinery outage.

The six New England states, which import most of their gas and heating fuel, had 4.6 million barrels of gasoline in storage as of Sept. 28, he said, which is 16 percent above the five-year average. The five-year average is a more accurate measure of supply than looking at days of supply, which assumes no additional fuel is coming into a region, he said.

There were 7.3 million barrels of distillate, which includes fuel oil and diesel, in storage as of Sept. 28. That’s 11 percent below the five-year average. However, Mason said this is the time of year when storage tank inventory is being built up for the winter. For example, the stock has been rising steadily since the 6 million barrels on hand a month ago, on Aug. 24.

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