Suncor refinery shutdown not expected to cause gas shortages in Colorado

Gov. Jared Polis is temporarily lifting regulations on the trucking industry to alleviate potential gas shortages and price increases after Suncor Energy announced it was shutting down its Colorado refinery until further notice following a series of malfunctions related to cold weather.

Polis issued an emergency declaration over the weekend to allow truck drivers carrying gasoline in Colorado to work longer hours and to allow heavier loads of fuel to be transported on the state’s interstates and highways.

The Commerce City refinery, which was shut down on Christmas Eve because of malfunctions, produces 35% to 40% of the gasoline and diesel used by Colorado’s motorists, and gas prices are expected to rise by next week as Suncor’s stored fuel supply runs out.

At a news conference Tuesday, Polis said he declared the emergency so the state can use all available tools to reduce the risk to Colorado’s fuel supply chain.

“We are continuing to gather more information and talking to Suncor and alternative refined fuel providers,” he said. “Our team is working to lessen the impact on Coloradans and our pocketbooks. We know higher gas prices are going to be a challenge until we are back at full refining capacity, but we are using all the tools that we have to reduce costs and increase supply.”

The executive order also allows the Colorado Department of Public Health and Environment to decide on a case-by-case basis whether emissions controls can be waived at certain locations so rail cars and trucks have flexibility in transferring fuel to other locations, said Conor Cahill, a governor’s spokesman. Those waivers would allow gas to be transferred more quickly.

Greg Fulton, president of the Colorado Motorcarriers Association, said truck drivers won’t jeopardize highway safety, but the extension on driving hours will allow them to get to and from gas distribution points in less time.

The Colorado State Patrol allows truck drivers to operate vehicles for 11 hours during a 13-hour day, Fulton said. But under the governor’s emergency declaration, drivers hauling fuel will be exempted from that rule through Jan. 31. The trucking industry is waiting to hear to exactly how many hours drivers will be allowed to work, he said.

“It isn’t some sort of an open checkbook or anything like that,” Fulton said.

That exemption will help drivers who likely will spend more time waiting in long lines at other gas distribution points such as the pipeline operated in Aurora by Magellan Midstream Partners, he said. Normally, waiting in a line for two to three hours to fill their tanker trucks cuts into their allowed driving time, Fulton said.

And allowing heavier loads means truckers who are going to refineries in Wyoming and Nebraska can bring back more gasoline to Colorado’s gas stations, Fulton said.

“You get into these extraordinary situations and you have to open up a range of options,” he said.

Metro Denver “to feel the brunt”

Canada-based Suncor Energy announced its long-term shutdown on Wednesday after the Commerce City refinery experienced multiple malfunctions, beginning on the night of Dec. 21, when the arrival of an arctic cold front sent Denver-area temperatures plummeting below zero. That night, a hydrogen plant tripped due to the cold temperatures and caused a cascading effect through the plant, the Department of Public Health and Environment said.

Excess pollutants were released because of that shutdown, according to the state health department, which monitors the refinery’s emissions.

Suncor then reported two fires at the plant, on Dec. 24 and Dec. 27.

Two workers were injured in the Dec. 24 fire, but the company has declined to provide updates on their conditions. No injuries were reported after the Dec. 27 fire, and the company said in a public emergency notification that emissions did not surpass levels that would cause acute health problems following that fire.

In a Dec. 28 news release, Suncor said the cold weather damaged equipment, and the company decided on Dec. 24 to close the entire facility to inspect equipment and make repairs. It expects to return to full operations by March, the statement said.

While motorists will see higher prices at the pump because of the shutdown of Colorado’s only oil refinery, analysts don’t foresee shortages.

“Prices consumers pay at the pump will surely rise and remain elevated while the Commerce City refinery is down, at least in comparison to prices in neighboring states,” said Jesse Mercer, senior director of analytics of crude at Enverus. “The Denver metro area is likely to feel the brunt of that, unfortunately.”

But while Suncor supplies 35% to 40% of Colorado’s gas and diesel, shortages aren’t likely given the typical lull in demand after the holidays and the ample pipeline capacity to ship fuel from neighboring states, Mercer said in an email.

“Although Commerce City is Colorado’s only refinery and is our single largest supplier of gasoline, the state’s motorists are mostly served by refineries in Texas, Kansas and Wyoming,” Mercer said.

Just how high gas prices along the Front Range go will depend on whether and at what price gas can be sent to the state during Suncor’s closure, said Deborah Gordon, a senior principal at Colorado-based RMI, a research and consulting organization that focuses on energy efficiency and sustainability.

“Perhaps more unexpected than the gasoline market, jet fuel prices could rise due to the Suncor refinery shutdown. With more people traveling by air, ticket prices could take a hit,” Gordon said in an email.

Pressure on airlines at DIA

The Colorado refinery supplies jet fuel used at Denver International Airport. Mercer said the local supply of jet fuel might get a little tight, noting that Suncor said it supplies one out of every three gallons to the Denver airport.

“Fortunately, there is a storage terminal near the airport that is connected by pipeline to suppliers from outside the state,” Mercer added. “Airlines can also help to take pressure off the local market by opting to fuel up out of state.”

Skyler McKinley, spokesman for AAA Colorado, said the Suncor plant shutdown should be put in context. He said Wisconsin, with a population similar to Colorado, lost its only oil refinery in 2018 after an explosion and fire damaged it. The refinery is expected to reopen for the first time in early 2023.

“Gas prices in Wisconsin right now are roughly on par and even slightly below the national average,” McKinley said.

The statewide average price of regular unleaded gas was $2.93 a gallon Tuesday compared to $2.81 a week earlier, according to AAA Colorado.

Ken Wilson, whose family has owned Wilson Conoco in Denver’s Belcaro neighborhood for about 80 years, said the gas station’s costs have risen 77 cents a gallon since mid-December.

“That goes on to the customer. We all have to raise our prices when we pay more for gas,” Wilson said. “It’s too bad because our prices have really gone down. They got so high and they’ve been dropping like crazy until this happened.”

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