US crude oil stockpiles drop amid Barry, fuel posts large builds

MOSCOW (MRC) -- US crude oil stockpiles fell more than expected last week, while gasoline and distillate inventories rose sharply, the Energy Information Administration said, due to the impact of the first major hurricane to hit the US Gulf of Mexico this season, reported Reuters.

Crude and gasoline futures turned lower after the report. US crude fell 39 cents per barrel to trade at USD57.24 a barrel by 11:09 a.m. EDT (1509 GMT), while gasoline futures traded down 0.45 cent to USD1.8867 a gallon.

"A hurricane-impacted report shows a drop in production and imports offsetting lower refining activity to yield a draw to crude stocks," said Matt Smith, director of Commodity Research at ClipperData.

Barry, which came ashore on Saturday in central Louisiana as a Category 1 hurricane, prompted oil companies to shut nearly 74% of production at US Gulf of Mexico platforms ahead of the storm, the US offshore drilling regulator said.US offshore oil production remained cut by 58% on Tuesday.

US crude production dropped 300,000 barrels per day in the week to July 12 to 12 million bpd, according to the EIA, a decline that analysts attributed to the storm.

Crude inventories fell by 3.1 million barrels last week, more than analysts’ expectations for a decrease of 2.7 million barrels.

Stocks at the Cushing, Oklahoma, delivery hub for U.S crude futures fell by 1.35 million barrels, EIA said.

Net US crude imports were marginally higher, rising 44,000 bpd, while exports alone fell about half a million bpd.

Most refineries in southeastern Louisiana kept running through the storm except for Phillips 66’s 253,600-bpd Alliance, Louisiana, refinery, which the company began restarting on Monday.

Total US refinery crude runs fell 171,000 bpd, EIA data showed. Refinery utilization rates fell by 0.3 percentage point to 94.4% of total capacity.

Gasoline stocks rose 3.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 925,000-barrel drop.

Distillate stockpiles, which include diesel and heating oil, rose 5.7 million barrels, versus expectations for a 613,000-barrel increase, the EIA data showed.
MRC

MOSCOW (MRC) -- The U.S. Environmental Protection Agency (EPA) issued a final rule allowing the year-round sale of motor gasoline blends containing up to 15% fuel ethanol, or E15, said Hydrocarbonengineering.

The ruling increases the availability of E15 blends in the United States, which are currently sold at more than 1,800 retail fuel stations across 31 states, according to Growth Energy, a trade association that represents producers and supporters of fuel ethanol.

Most motor gasoline fuel sold in the United States contains up to 10% ethanol, referred to as E10. Ethanol acts as a fuel oxygenate to create a cleaner burning fuel and to raise the octane rating of motor gasoline. Higher ethanol blends such as E15 may sell for lower prices relative to E10 when the price of ethanol is lower than gasoline blendstock on an energy equivalent basis. Presently, E15 is sold at a 3- to 10-cent/gallon price discount relative to E10, or 87 octane blends, in most markets.

In 2011, EPA granted a partial waiver under the Clean Air Act (CAA) to allow the use of E15 in motor vehicles manufactured in model year 2001 or later. Among other restrictions, the partial waiver did not change existing regulations that prohibited the sale of E15 in conventional fuel markets during the summer driving season, defined as June 1 to September 15 of each year. During the summer, EPA is more restrictive on the volatility of motor gasoline introduced into the market in order to limit evaporative emissions that contribute to ground-level ozone.

The expanded waivers for E15 were announced in October 2018, which will help to increase domestic energy production and to support the domestic agriculture industry. The final rule updated EPA’s interpretation of the statute. By considering E10 and E15 as substantially similar, the new interpretation effectively opened the opportunity for year-round E15 sales in most markets.

Although new fueling stations typically install fueling equipment that is E15 compliant, older stations may need to install new equipment to accommodate the slightly more corrosive nature of E15 gasoline. Retrofits may be cost-prohibitive if they require equipment, such as underground storage tanks, to be replaced.

Certain incentives could offset the cost of expanding fuel options to E15. The U.S. Department of Agriculture’s Biofuels Infrastructure Partnership program awarded USD100 million in grants to increase consumption of higher fuel ethanol blends during fiscal year 2015. State-level programs, such as the Iowa Renewable Fuels Infrastructure Program, have also encouraged station owners to offer E15 and higher ethanol blends.

E15 fuel is often marketed as an unleaded fuel with an octane rating of 88. According to Growth Energy, more than 1,800 stations offer E15. Minnesota is home to the largest number of E15 stations with 303 stations, followed by Wisconsin (197), Iowa (187), and Florida (185).

EIA does not collect E15 sales data, and state-level information is limited. The Minnesota Commerce Department reported 59.4 million gallons of E15 sales in the state in 2018, nearly triple 2017 levels. According to an Iowa Department of Revenue report, state E15 sales were about 35.5 million gallons of E15 in 2018, almost a 30% increase over the previous year. In 2018, E15 was sold at about 15% and 10% of retail fueling stations in Minnesota and Iowa, respectively. On a national level, however, less than 2% of retail fueling stations offer E15.
MRC

MOSCOW (MRC0 -- China’s crude oil imports on a daily basis in June rose 15.2% from a year earlier, customs data showed on Friday, as the start up of new large-scale refiners spurred demand for feedstocks, reported Reuters.

A new plant owned by Hengli Petrochemical, capable of processing 400,000 barrels per day (bpd) of crude, reached full operations in late May, while a similar sized plant owned by Zhejiang Petrochemical has started trial runs.

June imports by the world’s largest crude oil importer came in at 39.58 million tonnes, according to data from the General Administration of Customs.

That works out to 9.63 million bpd, up 1.7% from 9.47 million bpd level in May and up from 8.36 million bpd a year ago.

For the first six months of 2019, crude imports grew 8.8% from a year earlier to 244.6 million tons, or about 9.87 million bpd.

June imports rose despite poor margins limiting runs at some plants and amid shut downs for maintenance.

Last month, Sinopec’s 200,000-bpd Luoyang refinery, PetroChina’s 140,000-bpd Jinzhou refinery and a 200,000-bpd Liaoyang Petrochemical plant were shut for planned repairs.

Two coastal refineries under top state refiner Sinopec Corp suffered losses in June for the first time this year, plant sources have said, as they processed higher-priced crude while domestic fuel prices trended lower.

China’s crude oil purchases are expected to be subdued in July as fuel supply from mammoth new refineries stokes an already-sizeable glut.

Customs data also showed China exported 5.43 million tons of oil products in June, up 13.5% from a year earlier and rising from 4.49 million tons in May, reflecting the growing surplus.

Exports for the first half of 2019 totaled 32.52 million tons, up 7.3% from a year ago.

Natural gas imports, including liquefied natural gas (LNG) and pipeline imports, were 7.52 million tons last month, the customs data showed, easing from 7.56 million tons in May.

Imports of the cleaner fuel have slowed since March from peaks in the winter months when heating demand surges.
MRC

MOSCOW (MRC) -- Frames has designed and supplied an electrostatic colaescer for kerosene treatment to the Compania Espanola de Petroleos, S.A.U. (Cepsa) San Roque Refinery, located in the Bay of Gibraltar in Spain, said Hydrocarbonengineering.

Frames’ electrostatic coalescence technology is used as a prewash to reduce the acidity of a kerosene feed stream. During the processing of refinery-produced feedstocks various impurities are left in the petrochemical end-products. Some of these impurities can be removed by using Frames Electrostatic Coalescers. At the San Roque Refinery, the Frames Electrostatic Coalescer Prewash vessel has been installed to reduce the acidity of the kerosene feed stream by neutralizing naphthenic acids utilizing a weak caustic solution.

Cepsa selected Frames electrostatic coalescence technology for this project as it provides a high quality technical solution that reduces the use of chemicals and minimizing disposal requirements.

"We are encouraged to see that Frames’ Electrostatic Coalescers are selected by our clients in a growing number of refineries across the world,” says Geert Willemse, Product Specialist – Separators & Treaters at Frames. “It shows that our equipment is recognized as a cost-effective solution for reducing impurities for a wide range of feed streams."

The electrostatic process utilized in Frames Electrostatic Coalescers is a highly effective way to remove the impurities found in various distillate streams. It works by removing impurities from the distillate through the addition of an aqueous chemical reagent to the distillate stream, dispersing the reagent throughout the stream in extremely small droplets and exposing the mixture to the influence of an electric field. Once exposed to the electric field, the reagent is coalesced and separated from the distillate, taking along with it impurities that react with or dissolve in that reagent. The reagent is virtually insoluble in the oil this enables the separation of the reagent and the impurities from the oil.
MRC

MOSCOW (MRC) -- India’s state-run Mangalore Refinery and Petrochemicals Ltd (MRPL) has made its first purchase of US-produced Thunder Horse crude oil via a tender for mid-October delivery, reported Reuters with reference to its managing director M. Venkatesh.

"The price offered was very competitive, Venkatesh said. The state-run refiner placed an order to buy 1 million barrels of the sour oil, he said.

The deal comes as Indian refiners ramp up purchases of US oil to compensate for the loss of Iranian oil supplies as Washington tightens sanctions on Tehran. The widening spread between Brent and West Texas Crude WTCLc1-LCOc1 prices is also providing a boost to Asian refiners looking to buy US oil.

MRPL, which used to be Iran’s second-biggest Indian oil client, operates a 300,000 barrels per day coastal refinery in the southern Karnataka state. Venkatesh told Reuters the Thunder Horse deal is the firm’s second purchase of U.S. oil following a shipment of high-sulphur Southern Green Canyon oil received in February 2018.

An industry source said MRPL has placed its order with BP late on Thursday evening. The person declined to be identified due to the sensitivity of the matter.

BP could not immediately be contacted for comment.

Meanwhile MRPL’s Venkatesh said all units are now operating normally at the Karnataka refinery, where crude processing was curtailed due to water shortages in early May.

"The refinery is operating at almost peak capacity," he said.

As MRC wrote before, MRPL, has brought on-stream its polypropylene (PP) plant in the southern Indian state of Karnataka. he company has recently resumed operations at the plant following a turnaround. The plant was shut for maintenance in mid-April, 2019. Located in Mangalore, in the southern Indian state of Karnataka, the plant has a PP production capacity of 440,000 mt/year.

Mangalore Refinery and Petrochemicals Limited (MRPL), is an oil refinery at Mangalore and is a subsidiary of ONGC, set up in 1993. The refinery is located at Katipalla, north from centre of Mangalore city. The refinery was established after displacing five villages of Bala, Kalavar, Kuthetoor, Katipalla, and Adyapadi.
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