U.S. EPA proposes hike in biofuel mandate

MOSCOW (MRC) -- The U.S. Environmental Protection Agency has proposed increasing the volume of biofuels refiners must blend into their fuel annually to 20.04 billion gallons in 2020, from 19.92 billion gallons in 2019, sources said, as per Hydrocarbonprocessing.

The proposed mandate, now under review by other government agencies before being finalized, includes 15 billion gallons of conventional biofuels like ethanol, unchanged from 2019. It also includes 5.04 billion gallons of advanced biofuels, like those made from agricultural wastes, up from 4.92 billion in 2019, the sources said.

The EPA is charged with setting biofuel blending requirements for the refining industry as part of the Renewable Fuel Standard (RFS), a more than decade-old regulation that is aimed at helping farmers and reducing U.S. dependence on oil.

The policy has helped farmers by creating a huge market for ethanol and other biofuels, but oil refiners say compliance can cost a fortune.

EPA spokesman Michael Abboud confirmed the agency submitted a proposal for review but did not comment on its contents.

“The proposal is currently under interagency review, which places the Trump administration on track to release the Renewable Fuel Standard Renewable Volume Obligations (RVOs) on time for the third consecutive year,” he said.

As part of the advanced biofuel proposal, the agency set mandates for cellulosic fuel at 540 million gallons and non-cellulosic at 4.5 billion, according to the sources.

It also proposed a biodiesel mandate of 2.43 billion gallons for 2021, unchanged from 2020, they said. The EPA sets biodiesel mandates a year in advance.

Small refineries can be exempted from biofuel blending if they prove that complying would cause them financial strain, and the Trump administration made extensive use of such exemptions in the last two years.

That has saved refiners money but angered the corn lobby, which argues the practice erodes biofuel demand.
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MOSCOW (MRC) -- Privately held NAmerico Energy Holdings will launch an open season this week to secure shippers for a refined products pipeline that will run from the refinery complex at Corpus Christi to Brownsville, Texas, the company said, as per Hydrocarbonprocessing.

The pipeline will have capacity of at least 50,000 barrels per day and cost roughly $150 million, a source familiar with the matter said. The system, named the Liquidos Norte Pipeline, is expected to begin operations in October 2020 and will move gasoline and ultra-low sulfur diesel.

Corpus Christi has emerged as a top U.S. energy hub where companies are racing to build storage and export terminals to handle a surge of oil from U.S. shale production. Brownsville, which is about 160 miles (257 km) south of Corpus Christi, provides access to markets in Mexico and is also being targeted for new export and storage projects.

NAmerico Partners in 2017 said it would build a natural gas pipeline from West Texas to the Gulf Coast.
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MOSCOW (MRC) - U.S. refiners had a plan for 2020: use their complex operations to maximize profits by making products that would comply with new international laws capping sulfur content in shipping fuels, Reuters.

But after a series of unexpected market moves, heavy, sour crude oil processed by U.S. refiners has become more expensive, eating up hoped-for profit windfalls before they even materialized, forcing refiners to rethink plans to invest more in heavy crude processing units.

New regulations by the International Maritime Organization (IMO) will require ships globally to use fuels with a sulfur content below 0.5% beginning in 2020. Current shipping fuel is much dirtier, with a higher sulfur content.

The move was expected to make heavy crude oil cheap as most refiners worldwide shifted to lighter crudes that yield compliant lower-sulfur fuels - and benefit complex U.S. refiners that possess greater capability to break down that heavy crude into high-margin products.

Instead, global heavy crude supplies have become scarce due to sanctions on Venezuela, one of the world's biggest heavy producers, pipeline bottlenecks in Canada and OPEC output cuts. The Organization of the Petroleum Exporting Countries' April output fell to 30.23 million barrels per day (bpd), the lowest since 2015.

"The biggest single factor is the big loss of heavy crude," said Todd Fredin, executive vice president of supply, trading and logistics at Motiva Enterprises, which operates a 603,000 bpd operation in Port Arthur, Texas, the largest U.S. refinery. The benefit to complex refiners from the regulatory change "is going to be less than people thought," he said.

Heavy crude once fetched a big discount compared with light crude, but it has narrowed after sanctions on Iran and Venezuela. That weighed on first-quarter earnings for major independent refiners Valero Energy Corp and Phillips 66 .

Marathon Petroleum Corp this week halted plans to add a coking unit to its Garyville, Louisiana refinery that would have processed more heavy crude. Marathon said the coker, which was expected to come online in 2021, was no longer financially viable due to narrowed spreads.

U.S. refiners rely on cokers to break down residual oils into other refined products, including gasoil and naphtha. Refineries without that capability typically process more light crude, produced in abundance by the United States, versus heavy crude, which U.S. refiners have to import.

The price difference between U.S. Gulf Coast grades Louisiana Light Sweet (LLS) and Mars, the best proxy for comparing light, sweet and heavy, sour crude in the U.S. Gulf, has narrowed in the last few months.
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MOSCOW (MRC) -- Anadarko Petroleum Corp said that its board backed a USD38 billion bid from Occidental Petroleum Corp, adding pressure on rival Chevron Corp to raise its offer or walk away from the takeover contest, said Hydrocarbonprocessing.

Occidental submitted a new offer of USD76 per share to Anadarko on Sunday, structured as 78 percent cash and 22 percent stock, as opposed to an even cash/stock split previously, removing a requirement for any deal to receive the approval of Occidental’s shareholders.

Anadarko said its board has unanimously determined that the revised Occidental proposal constitutes a “superior proposal” and that it intends to terminate the Chevron merger agreement and will pay Chevron a USD1 billion termination fee.

In the late April Anadarko Petroleum Corporation announced that it intends to resume negotiations with Occidental Petroleum Corporation in response to Occidental's proposal to acquire Anadarko, which was announced by Occidental on April 24, 2019 (the "Occidental Proposal").

Evercore and Goldman Sachs & Co. LLC are acting as financial advisors to Anadarko. Wachtell, Lipton, Rosen & Katz is acting as legal advisor to Anadarko.
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MOSCOW (MRC) -- Iraqi Prime Minister Adel Abdul Mahdi said there was no link between an initial oil agreement his government was about to sign with Exxon Mobil and its receipt of waivers from the United States exempting it from sanctions on Iran, reported Reuters.

Media reports had quoted Iran’s ambassador in London on Monday saying the US would grant waivers to Iraq allowing it to deal with Iran economically in exchange for Baghdad signing an oil deal with Washington.

Iraq is close to signing a USD53 billion, 30-year agreement with Exxon Mobil and PetroChina to develop oil infrastructure in the south, Abdul Mahdi said, part of an energy megaproject.

Iraq currently has a waiver from the US allowing it to import gas from Iran. US President Donald Trump pulled out last year from a nuclear deal with Tehran and reinstated sanctions against it.

As MRC wrote before, in October 2017, ExxonMobil Chemical Company commenced production on the first of two new 650,000 tons-per-year high-performance polyethylene (PE) lines at its plastics plant in Mont Belvieu, Texas. The full project, part of the company’s multi-billion dollar expansion project in the Baytown area and ExxonMobil’s broader Growing the Gulf expansion initiative, will increase the plant’s polyethylene capacity by approximately 1.3 million tons per year.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
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