Into the unknown: closure threat for North American refineries

The COVID-19 outbreak and associated loss of liquids demand has presented a challenging margin environment for refiners,with the bottom 25% of refineries having negative margins for the year 2020. Coupled with an ongoing expansion of the refining fleet in the Middle East, Africa, and Asia, this dynamic will pressure refining margins through the next several years. In this insight, we evaluate the probability of closure for all modelled North American refining assets based on several factors -- profitability (net cash margin), petrochemical integration, upstream crude production integration, upcoming turnaround timing, recent investments, and carbon intensity. We examine the bottom quartile of our threat index in more detail and provide our view on which refineries are most likely to be permanently idled.