Fuel shipments from US Gulf, Europe will help supply East Coast after fire

MOSCOW (MRC) -- A refined products supply gap on the US East Coast created by a massive fire at a Philadelphia refinery in late June will be filled by shipments from the Gulf Coast region and Europe, reported Reuters with reference to market sources.

The fire completely destroyed the alkylation unit at Philadelphia Energy Solutions Inc’s oil refinery, the largest refinery on the East Coast.

The destruction of the unit, coupled with damage from the fire that ripped through the 335,000 barrel-per-day (bpd) refining complex, could force the 200,000 bpd Girard Point section of the two-section complex to remain shut for an extended period.

PES has since declared a force majeure on some gasoline deliveries, sources said.

Details on the extent of the damage and the amount of supply affected remain unclear, calling into question how much supply actually needs to be sent to the region.

Even when Girard Point restarts, it will run at reduced rates due to the loss of the alkylation unit, two sources told Reuters on Sunday. It could take several years for the company to rebuild the unit.

The arbitrage to ship from Europe to the East Coast has opened further since the fire, market participants said.

However, the arb did not open as wide as some expected because several vessels previously had been fixed and because of high inventories in the United States, according to data intelligence firm Kpler.

Gasoline loadings out of Europe from June 24 to June 30 currently total 535 kilotonnes, a 16.5% increase week-on-week, Kpler data showed.

Additionally, the largest US products pipeline, Colonial Pipeline, which connects Gulf Coast refineries with markets across the southeastern and eastern United States, has additional capacity available into its Linden, New Jersey delivery point, the company said in a statement.

The Gulf Coast currently has ample supply. Gasoline stockpiles totaled 84.6 million barrels in early June, the highest on record seasonally, according to US Energy Information Administration data.
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MOSCOW (MRC) -- S & B Engineers and Constructors, Ltd. (S & B) announced that it was selected by LyondellBasell to perform construction for a portion of the PO/TBA Project, which will install the world’s largest propylene oxide (PO) and tertiary butyl alcohol (TBA) plant, as per Hydrocarbonprocessing.

The PO/TBA Project, which represents the single-largest capital investment in the client’s history, will be split into two main facilities: a PO/TBA plant to be located in Channelview, Texas and an ethers unit to be located in Pasadena, Texas.

Under the contract, S & B is constructing the new 34-acre ethers unit at LyondellBasell’s Bayport Complex in Pasadena. The ethers unit will convert TBA into two high-octane fuel additives which will be blended in gasoline to reduce emissions.

"S & B is honored to be trusted by the client with such an important and historic project," said Tommy Collins, Executive Vice President and COO of S & B. "We are proud to play a part in LyondellBasell’s major US Gulf Coast organic growth program, which will bring significant economic benefits and job growth to Houston, S & B’s hometown since 1967."

The work is being executed using S & B’s Managing with Certainty execution philosophy, including our industry-leading project management system (iPIMS) and innovative Integrated Project PlanningTM toolset.

As MRC wrote previously, in August 2016, LyondellBasell made the final investment decision to build a high density polyethylene (HDPE) plant on the US Gulf Coast. The plant will have an annual capacity of 1.1 billion pounds (500,000 metric tons) and will be the first commercial plant to employ LyondellBasell's new proprietary Hyperzone PE technology. The start-up of the new plant is scheduled for 2019.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
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MOSCOW (MRC) -- Vitol, the world’s largest independent oil trader, has started building a small oil refinery at its storage terminal in Malaysia that will provide low-sulfur fuel for ships, reported Reuters with reference to a senior company official.

The project consists of a crude distillation unit that can process 30,000 barrels per day of crude and is located on the same site as Vitol’s oil storage terminal at Tanjung Bin in the southern Malaysian state of Johor, Vitol Asia’s President and Chief Executive Officer Kho Hui Meng said.

A construction unit under China National Petroleum Corp (CNPC) is handling the project which will involve moving a second-hand CDU from China to the site, he said on the sidelines of the Asia Oil & Gas Conference.

The project is expected to be completed in May 2020 and will augment Vitol’s refinery in Fujairah in the United Arab Emirates in providing low-sulfur fuel oil for ships, Kho said.

The global shipping industry will switch to marine fuel, known as bunker fuel, containing 0.5% sulfur or less from the start of 2020, down from the current 3.5%, as mandated by the International Maritime Organization.

Companies such as Germany’s Uniper and the United Arab Emirates’ Brooge Petroleum and Gas Investment Co (BPGIC) are either expanding their plants or building a new refinery in Fujairah, a ship refueling hub on the east coast of the UAE, to meet rising demand.

The new Malaysian refinery will be able to process a wide variety of low-sulfur oil available in the market including US West Texas Intermediate crude that Vitol trades in, Kho said.

Production of low-sulfur fuel from Vitol’s new refining unit will be just in time to meet rising demand as current stockpiles of such fuel in the region would have been drawn down by the middle of next year, he said.

Major oil companies and trading houses are stocking up low-sulfur bunker fuels in anticipation of a surge in demand for the fuel in 2020.
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MOSCOW (MRC) -- PetroChina DaQing Refining & Chemical has restarted its polypropylene (PP) unit following an unplanned maintenance work, as per Apic-online.

A Polymerupdate source in China informed that the company has resumed operations at the unit on June 26, 2019. The unit remained off-line for around one week.

Located in Daqing, China, the plant PP unit with production capacity of 300,000 mt/year.

As MRC reported earlier, PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company’s biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, is expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude this year, up by about 85 to 90 percent from last year’s level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia’s top oil producer Rosneft will supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would represent an increase of 50 percent over 2017 volumes. The additional oil sent to Dalian is about 120,000 bpd and will make up the bulk of the Russian increases.

PetroChina Company Limited, is a Chinese oil and gas company and is the listed arm of state-owned China National Petroleum Corporation, headquartered in Dongcheng District, Beijing. It is China's biggest oil producer.
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MOSCOW (MRC) -- Pengerang Refining and Petrochemical (PrefChem), a joint venture between Petronas and Saudi Aramco, is expected to restart a crude distillation unit at its oil refinery in Malaysia in July, reported Reuters with reference to sources.

The Pengerang Refining development, part of Petronas’ USD27 billion Pengerang Integrated Complex, consists of a 300,000 barrels-per-day (bpd) oil refinery and a petrochemical complex with a production capacity of 7.7 million tonnes per year in the southern Malaysian state of Johor.

The refinery stopped trial runs in April for safety checks after a fire occurred at the atmospheric residue desulfurization (ARDS) unit.

Contractors are still assessing the extent of damage at the fire-hit ARDS unit and repairs could take between three months and two years, one of the sources said, citing initial estimates.

The CDU will be processing low-sulfur crude in the absence of the desulfurization unit, the sources said.

The ARDS unit was set up to remove sulfur from fuel oil which is then passed through a residue fluid catalytic cracker (RFCC) - a secondary refining unit that upgrades residual fuels into higher quality products such as gasoline. The ARDS unit is located close to the refinery’s CDUs.

The refinery is expected to produce fuel in August-September although output may not meet commercial specifications yet. A 1.2-million-tonnes-per-year naphtha cracker at the site started trial runs this month.

By restarting the CDU in July, the refinery is working toward producing fuel that meets commercial specification by the end of the year, the sources said.

The project, originally known as RAPID, or Refinery and Petrochemical Integrated Development, was to resume operations by the end of this year, Petronas said in a statement last month.

Petronas and PrefChem have not responded to emailed requests for comment.

As MRC wrote earlier, Petronas plans to build a C6-based metallocene linear LDPE plant and a low density polyethylene (LDPE)/ethylene vinyl acetate (EVA) swing plant at its greenfield integrated refinery and petrochemical complex in southern Johor state by mid-2019. The proposed metallocene LLDPE will have a capacity of 350,000 tpa, while the LDPE/EVA will have a capacity of about 150,000 tpa. The two plants are part of Petronas' planned Refinery and Petrochemical Integrated Development project in Pengerang at Johor.

Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.
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