Extreme cold in Western Canada disrupts oil production, refining

MOSCOW (MRC) -- Canadian oil producers and refiners have cut processing rates last week as extreme cold weather grips Western Canada, reproted Reuters with reference to traders familiar with the matter.

Cold weather has spread across western Canada this week. In Edmonton, the capital of Canada’s main oil-producing province, Alberta, temperatures dropped to minus 36 degrees Celsius (minus 33 Fahrenheit) last Wednesday, according to Environment Canada.

Syncrude, one of the largest producers of crude oil from Canada’s oil sands, as well as North West Refining (NWR), which operates the Sturgeon refinery, have declared force majeure, two traders familiar with the matter said.

Force majeure is a declaration that unforeseeable circumstances prevented a party from fulfilling a contract.

Syncrude is a joint venture majority owned by Suncor Energy Inc, with minority stakes held by Imperial Oil Ltd and others. It can produce up to 360,000 barrels per day, upgrading thick bitumen to light oil. A spokeswoman for the Suncor did not respond to a request for comment.

NWR did not respond to a request for comment.

Meanwhile, Shell Canada’s Scotford facility is operating at reduced rates, two sources said. The Shell Scotford Complex consists of a bitumen upgrader, oil refinery, and chemicals plant. Shell declined to comment.

"We think the reduced runs are due to upgraders being short natural gas. Nat gas receipts are down by about 1-1.5 billion cubic feet per day (bcfd) due to freeze-offs," one source at a producer said.

Upgraders need natural gas to create steam to produce the hydrogen that converts bitumen into synthetic crude oil.

The weather-related disruptions are the latest in a series of issues to hit the Canadian oil market. Inventories are already at record highs due to a recent outage on the Keystone pipeline and a Canadian National rail strike.

High inventories are weighing on prices. The discount for Western Canada Select (WCS) heavy blend crude for February delivery in Hardisty, Alberta widened to the biggest since December 2018 versus US benchmark West Texas Intermediate (WTI) crude last week.

As MRC informed earlier, Shell Singapore restarted its naphtha cracker in Bukom Island in early December 2019, following a two months maintenance shutdown since the beginning of October 2019. Thus, this cracker was taken off-stream for the turnaround on 1 October 2019. The cracker is able to produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
MRC

MOSCOW (MRC) -- The American Chemistry Council (ACC) announced two new hires and an internal promotion that strengthen the association’s congressional federal affairs and legal team under President and CEO Chris Jahn, said ACCA.

Ross Eisenberg will join ACC as vice president of federal affairs on February 3, 2020. Eisenberg, currently serving as vice president of energy and resources policy at the National Association of Manufacturers, will lead congressional and federal lobbying activities overseeing an issue portfolio that includes chemical management; global trade; energy and environment; rail, transportation and infrastructure, and security, among others. Eisenberg will also oversee ACC’s political action committee, AmeriChem PAC.

"Ross brings deep expertise on issues that are vital to a thriving chemical industry and the broader manufacturing sector, including energy use and production; air and water quality; climate; energy efficiency and other significant environmental and sustainability issues,” said Jahn. “The chemical industry faces intense and growing scrutiny and Ross brings the right leadership expertise and collaborative approach to help advance sound public policies that protect public and environmental health; preserve our global competitiveness; promote innovation, and drive economic expansion,” he added.

The organization also announced the hiring of Jill Brubaker as a director of federal affairs responsible for a core portfolio that includes transportation and infrastructure issues. Brubaker joins ACC from member company Dow where she served most recently as director of federal legislative affairs and director of political affairs.

In addition to the federal affairs appointments, ACC announced the promotion of Allison Starmann to General Counsel and Corporate Secretary, effective January 1, 2020.

Starmann has been with ACC for ten years, 5 of those as deputy general counsel, providing legal counsel and oversight on issues ranging from Toxic Substances Control Act (TSCA) litigation, chemical-specific product groups, and Responsible Care, the industry’ world-class environmental health, safety, and security management and performance initiative.

"Allison’s integrity, along with her strategic legal expertise made her a natural choice for ACC’s executive team. Her knowledge of leading industry issues such as TSCA, coupled with her previous experience as assistant corporate secretary will be invaluable to the association and our members as we continue to face an increasingly challenging legal and political environment," said Jahn.

As MRC informed earlier, Russia's output of chemical products dropped by 3.2% in November 2019 month on month.
However, production of basic chemicals increased by 3.6% in the first eleven months of 2019, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, the largest increase in production volumes on an annualized basis accounted for mineral fertilizers and polymers in primary form. Last month, 255,000 tonnes of ethylene were produced versus 210,000 tonnes in October; by November, Russian producers had completed all their scheduled works. Thus, 2,721,000 tonnes of this olefin were produced in January-November 2019, up by 0.3% year on year.
MRC

MOSCOW (MRC) -- Showa Denko K.K. (SDK) decided to establish its subsidiary’s second factory in Shanghai to produce high-purity gases for electronics, said the producer.

Shanghai Showa Electronics Materials Co., Ltd. (SSE), which is SDK’s wholly owned subsidiary producing high-purity gases for electronics, acquired a right to use a site for its second factory adjacent to the First Factory for 50 years, and will establish facilities to produce high-purity nitrous oxide (N2O) and high-purity octafluorocyclobutane (C4F8) gases and a dangerous goods warehouse to stock high-pressure gases. The second factory will start its operations in the second half of 2021.

High-purity N2O is a specialty gas used to form oxidized films on surfaces of integrated circuits which will compose semiconductor chips or display panels. High-purity C4F8 is a specialty gas used for etching of those oxidized films and other micromachining processes. Due to progress in information communication technologies including 5G mobile communication technology and Chinese government’s policy to nurture high-technology industry, the market in China for semiconductor chips and display panels (e.g., organic electroluminescent display panels for TVs, etc.) is expected to expand.

The Showa Denko Group is now producing high-purity N2O at Kawasaki Plant and a site of a group company in the Republic of Korea, and high-purity C4F8 at Kawasaki Plant and SSE’s First Factory in Shanghai. In order to strengthen its adaptability to changes in needs of the market, including the need for stable supply of high-purity gases, the Group now aims to promote “local consumption of locally produced high-purity gases” further. Moreover, in the present situation where the Chinese government is strengthening regulations on chemicals, establishment and expansion of the Showa Denko Group’s dangerous goods warehouse in Shanghai to stock high-pressure gases will enable the Group to strengthen its supply chain and competitiveness. By combining its production and quality-control technologies and getting best supply system ready for customers, the Showa Denko Group will further strengthen its high-purity gas business.

As per MRC, Showa Denko K.K. in March 2018, it stopped production at a cracking unit in Oita (Oita, Japan) for preventive maintenance. Maintenance at this enterprise with a capacity of 691 thousand tons of ethylene per year continued until April 19, 2018.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Showa Denko K.K. Mainly engaged in the petrochemical business. The company's petrochemical division produces and markets industrial gases, olefins, organic chemicals, and others.
MRC

MOSCOW (MRC) -- Leading executives representing the U.S., Canadian and Mexican chemical industries today publicly reaffirmed their support for U.S. ratification of the United States-Mexico-Canada Agreement (USMCA), also known as the Canada-United States-Mexico Agreement(CUSMA) in Canada and the Tratado entre Mexico, Estados Unidos y Canada (T-MEC) in Mexico, said ACCA.

The announcement, led by American Chemistry Council (ACC) President and CEO, Chris Jahn; Chemistry Industry Association of Canada (CIAC) President and CEO, Bob Masterson; and Asociacion Nacional de la Industria Quimica (ANIQ) President, Miguel Benedetto Alexanderson, comes just hours before an expected U.S. Senate vote on USMCA that would bring the agreement one step closer to ratification. The announcement continues years of collaboration among the three associations on North American trade issues, including a joint March 2017 statement on industry priorities for modernizing the North American Free Trade Agreement (NAFTA).

"We all win under this new agreement,” said ACC’s Jahn. “Our unanimous support for ratifying USMCA is a testimony to the collaborative, highly integrated North American chemical manufacturing sector that is uniquely positioned to continue to grow and create new jobs under the new North American trade pact. For the United States in particular, companies eyeing the U.S. shale gas revolution and chemical production boom should soon have even greater confidence to invest, knowing that they will be able to trade freely with our industry’s largest trading partners in Canada and Mexico," Jahn added.

"We’re thrilled at the prospect of Canada’s ratification of CUSMA to further minimize barriers to North American chemicals trade,” added CIAC’s Masterson. “Eliminating tariffs and other barriers to trade has changed the conditions of doing business across borders in North America and encouraged regional investment and economic integration. Producers have become more efficient and more productive because they can benefit from vertical specialization and economies of scale. Canadian, Mexican, and U.S. goods – including chemicals, and goods that require chemicals as inputs – are competitive in the global marketplace because they are products of integrated North American supply chains," he said.

"T-MEC strengthens NAFTA’s legacy of eliminating tariffs – removing barriers to trade, keeping North American manufacturing costs low, and boosting Mexico’s chemicals exports and creating new jobs that depend on those exports,” said ANIQ’s Benedetto. “In particular, T-MEC will enable Mexico, Canada, and the United States to evaluate where they may be able to cooperate and regulate chemicals more efficiently. We see greater regulatory cooperation as an unqualified win for companies here in Mexico and consumers throughout the region who support a risk-based approach to regulating chemicals and protecting human health and safety and the environment," he said.

As MRC informed earlier, Russia's output of chemical products dropped by 3.2% in November 2019 month on month.
However, production of basic chemicals increased by 3.6% in the first eleven months of 2019, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, the largest increase in production volumes on an annualized basis accounted for mineral fertilizers and polymers in primary form. Last month, 255,000 tonnes of ethylene were produced versus 210,000 tonnes in October; by November, Russian producers had completed all their scheduled works. Thus, 2,721,000 tonnes of this olefin were produced in January-November 2019, up by 0.3% year on year.
MRC

MOSCOW (MRC) -- Petrobras finalized the sale of its shares at Petrobras Oil & Gas B.V., the company producing oil in Nigeria, on Africa's west coast, reported Reuters.

The Brazilian state-controlled firm had 50 percent of the company, in a joint venture with BTG Pactual E&P B.V, and sold its shares to Canada's Africa Oil Corp. for USD1.45 billion.

According to a note released by Petrobras, the transaction "is in line with the optimization of the portfolio and the improvement in the company's capital allocation, aiming at generating value for its shareholders."

PO&GBV held shares in the production of three Nigerian oil fields - Agbami, Akpo, and Egina - with a 34 thousand daily average of barrels for Petrobras. The move marks the end of the company's activities in Africa.

As MRC informed before, in early December 2019, the chief executive of Brazilian state-run oil firm Petroleo Brasileiro said on Friday he wants to sell the company's stake in petrochemical company Braskem within 12 months, adding that he strongly disagreed with reported plans to delay the sale.

We also remind that Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

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