USWC Refining Supply Risks Up as January Flares Spike


   
Kristina Davis
DTN Refined Fuels Market Reporter

   MIAMI, FL (DTN) -- At least eight flaring events have been reported by U.S. 
West Coast refineries since the start of this year, a third more than in 
January 2025, with the closure of two refineries expected to cut the region's 
processing capacity by 17% by April.

   Analysts are raising the flag on supply volatility and price swings for 
refined products if this elevated trend of operational stress persists 
throughout the first quarter.

   So far in January, PBF Energy's 166,000 bpd Torrance, California refinery 
has accounted for the majority of the flare incidents, making at least six 
filings with the South Coast Air Quality Management District (AQMD).

   Five incidents at Torrance were reported from January 15 through January 21 
as emergency events, while one was cited as a planned flare related to startup 
and shutdown issues triggered by mechanical problems.

   Meanwhile, Phillips 66 reported a planned flaring event at its 139,000 bpd 
Wilmington refinery that began in mid-January. Despite a close scheduled end of 
last year, the refinery remains open, AQMD filings show.  Phillips 66 officials 
told DTN on Tuesday (1/27) that active fuel production stopped at Wilmington at 
the end of 2025 and units there have been under maintenance since.

   As of Tuesday, the eight flaring events for this month compare with the six 
for January 2025, tracked from combined filings made to the AQMD and the Bay 
Area Air Quality Management District.

   The elevated activity comes as California's refining system faces a major 
contraction. On January 6, Valero announced plans to idle its 145,000-bpd 
Benicia refinery by April. Valero said it will rely on inventories and imports 
to supply the Northern California market once operations at Benicia are fully 
idled.

   With fewer operating refineries, unplanned outages and repeated flare 
incidents could amplify supply concerns and fuel price swings, according to 
market traders and regional energy analysts. "Probably more volatility in 
2026," one trader remarked, citing refinery issues, fewer operating plants, and 
thinner trading activity.

   Fuel pricing for January already reflects sensitivity to West Coast supply 
conditions.

   Los Angeles jet fuel basis firmed by 15cts on January 23 after a brief lull, 
despite remaining well below multi-year highs reached earlier in the month.

   West Coast jet fuel inventories were unchanged at 11.2 million bbl in the 
most recent reference week and stood 1 million bbl below last year.




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