Canadian producers push back as Alberta orders oil cuts

MOSCOW (MRC) -- Several oil companies in Canada pushed back on Monday against Alberta’s mandated cuts in crude production, warning about excessive government intervention even as the discount on Canadian crudes narrowed sharply on the curtailment plan, said Hydrocarbonprocessing.

Alberta Premier Rachel Notley said on Sunday the government would force producers to cut output by 8.7 percent, or 325,000 barrels per day (bpd), until excess crude in storage is reduced. The move is unusual for a market economy like Canada, in comparison with members of the Organization of the Petroleum Exporting Countries whose oil companies are often state-owned.

Prices for Canadian grades of crude oil moved sharply upward Monday, narrowing the deep discounts they had been trading at, relative to their U.S. counterparts. While producers said they would comply with the mandatory cuts, executives from Canada’s Suncor Energy Inc, Husky Energy Inc and Imperial Oil, integrated producers with domestic refinery and upgrading capacity, expressed disappointment.

“We believe the market is working and view government-ordered curtailment or other interventions as possibly having serious negative investment, economic and trade consequences,” said Husky in a statement. However, major producers like Cenovus Energy Inc and Canadian Natural Resources Ltd were vocal with their support.

Canada is one of the world’s largest oil producers, supplying more than 4.2 million barrels a day, but WCS prices slumped in October to a discount of more than USD52 a barrel below WTI due to the transportation constraints and storage glut. Heavy Western Canadian Select oil traded at a USD25 a barrel discount to U.S. crude on Monday, compared with a USD32 discount on Friday. Light synthetic crude from the oil sands settled at USD17 below the benchmark, USD8 narrower than Friday.

Following the cuts, Pourbaix said Cenovus expects discounts closer to USD20 a barrel in 2019, supporting investment of C1.5 billion (USD1.1 billion) in 2019, in line with 2018 capital spending. “That would not have been the case if the government hadn’t take action,” Pourbaix said.

Suncor is assessing the impact of the government’s announcement, it said, noting that the market is the most effective means to balance supply and demand and normalize differentials. “Less economic production was being curtailed and differentials were narrowing as a result of market forces,” Suncor said in a statement, adding that specific effects from the cuts will be discussed in its upcoming 2019 outlook.

Imperial Oil CEO Rich Kruger said the company was reviewing the impact on its investments. But CNRL cheered the Alberta government’s move, noting “these are unprecedented times and they call for urgent action.” Nexen, a subsidiary of CNOOC Ltd, said the actions would help strengthen the Alberta economy.
MRC

Petrobras refinery halted after fire, no impact seen on fuel supply

MOSCOW (MRC) -- Brazil’s state-run oil company Petroleo Brasileiro SA said it has halted operations at its Abreu and Lima refinery in Pernambuco state after a fire broke out there early in the morning, said Reuters.

The fire, which occurred in a tower of the coking unit, caused no injuries and has been put out, Petrobras said, adding that it should not affect fuel supply.

As MRC informed earlier, Brazilian state oil company Petroleo Brasileiro SA is operating its refineries at a utilization rate of 85 percent and has gained market share in diesel after a subsidy program was instituted.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC

MFG Chemical upgrades newly acquired Pasadena, Texas plant

MOSCOW (MRC) -- MFG Chemical, a global leader in specialty and custom chemical manufacturing, is upgrading its Pasadena, Texas plant, which the company acquired in March 2018, and sits on 24.5 acres, as per Hydrocarbonprocessing.

The acquisition of the Pasadena plant, together with the company’s 3 plants in Northwest Georgia, makes MFG Chemical one of America’s largest consumers of Maleic Anhydride.

Pasadena plant improvements are scheduled for completion by the end of the 1st Quarter of 2019, and entail a multi-million dollar investment.

Improvements include debottlenecking and new capacity additions, including two new reactors, one of which is 20,000 gallons in size.

Keith Arnold, CEO of MFG Chemical and Member of the SOCMA Board of Governors, commented, "MFG is increasing its capacity to meet its customers’ growing needs for custom and specialty chemistries."

As MRC reported earlier, in October 2016, SIBUR signed an agreement with Conser, an Italian engineering company, to acquire a license for maleic anhydride (MAN) production technology for its Tobolsk facility.

Maleic anhydride is used in the construction, agriculture, automotive, paint and varnish, furniture, pharmaceutical and other industries. It serves as feedstock for films, synthetic fibers, pharmaceuticals, detergents, fuel components and oils. The use of MAN allows achieve high strength of the material as well as its resistance to moisture, extreme temperature and mechanical stress.
MRC

KBR awarded ammonia plant revamp contract in India

MOSCOW (MRC) -- KBR, Inc. announced that it has been awarded a contract to supply proprietary equipment to Southern Petrochemical Industries Corporation Ltd. India for its plant located in Thoothukudi in the State of Tamil Nadu, as per Hydrocarbonprocessing.

Under the contract, KBR will supply an ammonia converter basket as proprietary equipment for the project.

In 2017, KBR supplied License and Basic Engineering Design (LBED) for revamp of the plant to reduce the energy consumption along with marginal capacity increase, including revamp of the furnace, ammonia converter and exchanger.

"KBR is proud to work with Southern Petrochemical Industries Corporation to revamp its ammonia plant using our energy efficient ammonia technology," said John Derbyshire, KBR President, Technology. "Our proven ammonia technology has the lowest energy consumption in the industry making it the first choice for ammonia producers globally."

KBR has a long track record of successfully revamping ammonia plants all over the world, including non-KBR technology plants. KBR is a global leader in ammonia technology and has been involved in the licensing, design, engineering, and/or construction of more than 230 grass roots ammonia plants and over 100 revamp ammonia projects globally.

As MRC wrote previously, in January 2018, KBR, Inc. announced today that it had been awarded a contract from Indorama Eleme Fertilizer & Chemicals Limited (Indorama) and Toyo Engineering Corporation (Toyo) for the Train 2 ammonia plant at Indorama's Port Harcourt site in Nigeria.

KBR is a leader in ammonia technology and has been involved in the licensing, design, engineering, and/or construction of more than 230 grass roots ammonia plants and over 100 revamp ammonia projects globally.
MRC

Kemira has formed a joint venture in China

MOSCOW (MRC) -- Kemira has received final authority permits and closed the deal announced on September 29, 2017, said the company.

Kemira has formed a joint venture with an AKD producer in China. Kemira forms a joint venture – Kemira TC Wanfeng Chemicals Yanzhou – with Shandong Tiancheng Wanfeng Chemical Technology.

NewCo strengthens Kemira’s position as a leading global supplier for the Pulp & Paper industry. NewCo will mainly produce AKD wax and its key raw material fatty acid chloride (FACL). AKD wax, where the main component is based on renewable raw material, is a sizing chemical used in board and paper manufacturing to create resistance against liquid absorption. Kemira is the global market leader in sizing chemicals.

Through the backward integration, Kemira expands its position in the value chain. NewCo will provide a high-quality AKD wax and will be globally the largest AKD wax manufacturing unit significantly improving Kemira’s AKD wax capacity. NewCo’s site is located in the same chemical park with Kemira’s first AKD wax plant in Yanzhou, China and the proximity of the two sites results in operational synergies. The NewCo site also offers growth opportunities for other relevant chemicals.

In addition, NewCo will produce polyaluminum chloride (PAC) which is a coagulant for water treatment. NewCo will start the production of chemicals in the second half of 2019 after necessary investments and the ramp-up phase are completed.

“The joint venture is a good strategic fit. We strengthen our position in the market with a quality asset and secure our supply of the key raw material for AKD wax. With the newly built site, we ensure our capacity utilization and support our customers better with our global delivery capability. At the same time, this enables us to grow even faster in APAC”, says Kim Poulsen, President, Pulp & Paper.

Kemira has 80% and TC Wanfeng 20% of NewCo. Value of the investment for the 80% share is around EUR 55 million and Kemira has an option to acquire TC Wanfeng’s 20% in the coming years with pre-defined conditions.
MRC