LOWER REFINERY OPERATIONS SEEN PRODUCING PROFITS

  U.S. refiners will have to
  reduce operations if they want to be profitable this year, said
  industry officials attending the National Petroleum Refiners
  Association meeting here.
       "If the refining sector can discipline itself to refine
  about 12 mln barrels of crude oil a day, we have a chance to
  pull down inventories to acceptable levels by the second
  quarter, said Archie Dunham, executive vice president of
  petroluem products at Conoco Inc
      "If not, the industry will have a tough 1987," he added.
       Last week's American Petroleum Institute report said that
  U.S. refining capacity rose three pct to 78.7 pct of capacity,
  with crude oil runs at 12.2 mln barrels per day for the week
  ended March 20.
       The API said that with the higher crude oil runs, 
  distillate and gasoline inventories were sharply above year-ago
  levels. Gasoline stocks were at 245.6 mln barrels, some 17.2
  mln barrels above year-ago levels. Distillate stocks, at 108.7
  mln barrels, are 10.9 mln barrels above last year's level, the
  API said.
       Henry Rosenberg, chairman of Crown Central Petroleum Corp
  &lt;CNP> told Reuters that unless refining and marketing return to
  profitability, oil companies will have to rely on downstream
  operations to produce an acceptable level of earnings.
       "The jump in refining capacity is a concern if it
  continues," said Kenneth Buckler, executive vice president of
  refining and marketing at &lt;Total Petroleum Co>, a U.S.
  subsidiary of Cie Francaise Des Petroles of France.
       Refineries should operate near 75 pct of capacity given
  the current level of demand but the operating level should
  increase as gasoline demand picks up in the next quarter,
  Buckler said.
       Dunham said the potential operable capacity of U.S.
  refineries should also be cut about 500,000 barrels of crude
  per day. "I expect to see the shutdown of more small refineries
  over the next five years," he said, adding that these
  facilities refine between 10,000 and 30,000 barrels of crude
  oil per day. The API said U.S. operations have the capacity to
  refine 15.6 mln bpd of crude.
  

