Refinery employees worried about response to virus cases

MOSCOW (MRC) -- Employees at Valero Energy Corp’s Port Arthur, Texas, refinery expressed worries about the company’s slow response to keep the coronavirus from spreading there after two workers tested positive, reported Reuters with reference to four people familiar with the matter.

Valero, the nation’s second-largest refiner, started to cut non-essential work and related contractors only this week after starting temperature checks last week - much later than other major U.S. refiners, according to the people.

Valero spokeswoman Lillian Riojas said the company maintains the privacy of employee health information and as such would “not publicize individual cases of COVID-19.”

Riojas, however, outlined Valero’s response in case of a positive test, saying it included compliance and cooperation with the Centers for Disease Control and local health authorities, sterilization of affected areas and communicating with employees in ‘close contact’ with those affected.

That is “followed by implementation of appropriate quarantines, communication with our employees at the site, and, most importantly support of all affected employees.”

Globally, the coronavirus has infected over 1.3 million people and killed more than 74,000. The United States has the most number of cases, at more than 360,000.

The pandemic presents significant challenges to energy facilities like power generation plants, offshore drilling platforms and refineries, where remote operation is often not possible and some staffing is needed to run key units.

Refiners are still meeting customer needs for gasoline and jet fuel that have slowed to a trickle in the United States and globally as the pandemic keeps people at home.

The largest U.S. refiner Marathon Petroleum Corp, and Exxon Mobil Corp, the third largest, cut contract workers, who perform maintenance, two weeks ago.

Temperature checks for people entering refineries began about the same time at major U.S. refineries.

Unable to work from home, many Port Arthur refinery employees are indoors in shared control rooms and eat in common dining areas, placing them at greater risk of contracting COVID-19, the sources added on condition of anonymity because they are not authorized to speak to media.

The Port Arthur refinery processes 335,000 barrels of crude oil per day, though it has lately been running at reduced rates due to weakened demand for products.

The refinery employs more than 900 salaried and hourly workers. Its about 450 hourly workers are represented by the United Steelworkers union (USW). About 750 contract workers are employed by third-party companies Valero hires to perform maintenance in the refinery.

The first case reported at the refinery was a contract worker who had no contact with employees, but had contact with another contract worker who had access to a building used by employees, the sources said.

Employees were notified on March 28.

Temperature checks were implemented after employees were notified about the first case.

“In my opinion it was a very meager cover-your-ass by a company that has already had a contractor working inside the fence who tested positive for COVID-19,” one of the sources said of the temperature checks.

The second case was an employee, the sources said.

The company notified its employees on April 5, adding the affected person has not been in the refinery since March 27.

The two people and those who worked closely with that person were sent home for 14 days and the places where they were working underwent “enhanced cleaning,” according to the sources.

Officials with USW 13-423 in Port Arthur, which represents workers at the Valero refinery, declined comment.

In other recent incidents, BP Plc said some workers have contracted COVID-19, the respiratory disease caused by the coronavirus, on offshore platforms in the Gulf Coast and at a facility in Alaska.

As MRC reported before, Valero Energy Corp restarted the small CDU at its Port Arthur refinery after repairing a valve on 25 September 2019. And in late October 2019, Valero Energy Corp shut the small crude distillation unit (CDU) at its Port Arthur refinery. The 75,000-bpd AVU 147 CDU was shut to repair a heat exchanger.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- Marathon Petroleum Corp said it would temporarily idle its 26,000-barrel-per-day Gallup, New Mexico, refinery beginning on April 15, amid slumping demand from the coronavirus pandemic, said Reuters.

The company said it intended to maintain regular employee staffing levels with employees assigned to tasks “necessary to support our idle status and eventual return to normal operations."

\\"“At this time, the duration of the idling period is unknown; however, it is our intent to return to normal operations as soon as demand levels justify doing so,” a company representative said in a email.

Refineries around the world have shut units or cut back to minimum processing levels because of a plunge in demand because of the coronavirus. The pandemic has caused the global aviation industry to virtually shut down and kept motorists off the roads.

Overall global fuel demand is expected to drop by 20% to 30% in April and remain weak for months after that.

Gallup will be the second North American refinery to idle amid the coronavirus pandemic. North Atlantic Refining Ltd’s 130,000-bpd Come-by-Chance refinery in Canada said it was pausing production at the end of March.

As MRC wrote previously, a portion of Marathon Petroleum Corp’s 363,000 barrel-per-day Carson refinery in California was shut in late February 2020, following a fire.

We also remind that the gasoline-producing unit at Marathon Petroleum Corp’s 585,000-barrel-per-day (bpd) Galveston Bay Refinery in Texas City, Texas, remained shut for six weeks for repairs in late Juney-early August 2019. The 140,000-bpd gasoline-producing Fluidic Catalytic Cracking Unit 3 (FCCU 3) was shut on June 29 2019 to repair a leak. The refinery’s 65,000 bpd reformer, called Ultraformer 4, was also shut down.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.
MRC

MOSCOW (MRC) -- Nigeria has decided to shut down all its oil refineries as it works to secure funding and a model to upgrade them, reported Reuters with reference to the head of Nigerian National Petroleum Corporation's (NNPC) statement.

The three refinery sites in Africa’s largest oil exporter have worked only sporadically due to years of underinvestment. It has been working to revamp them, but has struggled to find external financing to do so.

“Today, after proper scoping, which was not done in the past, we know exactly what to do to get them back on stream,” NNPC head Mele Kyari said.

Nigeria, Africa’s largest oil exporter, is scrambling to cut nearly USD5 billion from its budget amid an oil price crash brought on as coronavirus lockdowns slashed global demand and a market-share battle between Russia and Saudi Arabia flooded the world with oil. This week it also sought nearly USD7 billion from international lenders.

In statements posted on Twitter, Kyari said the oil industry will look to cut costs and extend payments wherever possible to survive oil prices that hit 18-year lows late last month.

Running Nigeria’s refineries is costly, as they are decades old and poorly maintained, and even world-class refineries are cutting output due to falling fuel prices.

While Kyari said they had secured funding without providing details, several previous deals - including with oil traders - to fund repairs have fallen through, and a source close to the discussions told Reuters other funding had yet to be confirmed.

Kyari said NNPC was pursuing “a different model” for the refineries, including the type used by Nigeria LNG, which is run by international companies such as Shell, Total and Eni alongside NNPC.

Price caps have forced NNPC to import nearly all the gasoline the nation comsumes. While Kyari also said Nigeria had eliminated subsidies, experts said that the retention of price caps meant the government could incur costs again when international fuel prices rebound.

Kyari also expressed optimism that a meeting this week between OPEC and other producers could yield a fresh deal to shore up oil prices. The group is due to hold a video conference on Thursday at 1400 GMT.

“We believe the ongoing engagements between global oil producers will bring back demand and once that happens, the market will balance and fully recover by year-end,” he said.

As MRC wrote before, Shell said Monday it will not move ahead with its planned equity interested in the Lake Charles LNG project in Louisiana, citing difficult market conditions, and that its partner, Energy Transfer, would instead take over as the project's developer.

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 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.
MRC

MOSCOW (MRC) -- Asia Pacific oil refineries are finding that processing cuts are not keeping pace with sharp drops in fuel margins, which hit record lows this month, caused by the demand decline from the economic dislocations of the coronavirus outbreak, said Hydrocarbonprocessing.

Analysts at Wood Mackenzie, JBC Energy, Energy Aspects, Rystad Energy, IHS Markit and FGE estimate that Asian refineries will cut their processing by between 2 million to 4 million barrels per day (bpd) in April. For the whole of the second quarter, the cuts will average between 2 million to 2.7 million bpd, the analysts said.

“While refineries scramble to cut runs to catch up with the massive demand losses, product oversupply will continue in the near future as there’s just been too big of a demand loss,” said Sandra Octavia, analyst at Energy Aspects.

The Asian cuts are occurring amid a global oil demand contraction as lockdowns to limit the coronavirus spread wreak havoc on gasoline, diesel and jet fuel consumption.

“We estimate that total product demand is globally down by 22.5 million barrels per day (bpd) year-on-year for April, while refiners have cut runs by 14.1 million bpd year-on-year,” said Paola Rodriguez-Masiu, senior oil analyst at Rystad Energy.

Indonesia and Australia, the biggest fuel importers in the Asia Pacific, are reducing their intake in April and planning run cuts at their refineries. At the same time, India, the world’s third-largest crude importer, has ramped up fuel exports despite poor margins and deepened refinery run cuts to cope with a fuel supply surge.

Australia’s gasoline and diesel imports in April could fall by as much as 150,000 bpd from a year earlier, IHS Markit analyst Matthew Chew said.

Japan’s fuel demand is also set to fall further as its government widened measures this week to prevent coronavirus from spreading. Refiner’s efforts to cut their yield of jet fuel and gasoline, both of which have negative profit margins with gasoline at a record low, has caused diesel output to surge, causing the 10ppm gasoil crack to slump.

Margins for 0.5% sulphur fuel oil used in shipping hit record lows last week. “The steep deterioration in demand we expect to happen in the West in April and May will also have a big impact on product pricing in Asia and put additional pressure on the region’s margins,” said Neil Crosby, lead refining analyst at JBC Energy.

Unless deeper production cuts take place, refining margins will continue to sink as refiners dump excess fuel in global markets, with more ships needed to store oil as onshore storage tanks have all been booked, the analysts said.

More than 12 tankers were booked in late March to store refined products off Europe, sending freight rates soaring.

As MRC informed earlier, the coronavirus disease 2019 (COVID-19) pandemic and the crude oil crash are interacting in complex ways to transform the propylene market. The lower cost to produce propylene will not translate directly into greater availability. With populations around the world ordered to limit travel in order to contain the pandemic, fuel demand is way down, and crude oil refining - the cheapest source of propylene - is under pressure to cut back operations.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- As people around the world continue to make major adjustments and tough decisions related to the COVID-19 crisis, GPA Midstream Association, GPSA, and their member companies are tirelessly working to ensure that midstream employees are taking appropriate precautions and following strict COVID-19 protocols so that midstream operations, considered critical infrastructure by the Department of Homeland Security, are not interrupted, said Hydrocarbonprocessing.

"Companies in energy's midstream sector transform raw natural gas into valuable products that other industries can use, and that goes well beyond natural gas that people use in their homes and businesses for energy," said GPA Midstream President and CEO Joel Moxley. "Several components of health care and hygiene products wouldn't exist without natural gas and natural gas liquids, so we're all stepping up to ensure that midstream can help meet those and many other critical needs during this global pandemic.

"GPA Midstream is actively working and coordinating with our federal agency and state agency partners to ensure our members are aware of the latest guidance and statements regarding activities surrounding the coronavirus. Both associations and our members will continue to follow the guidance of the Centers for Disease Control and Prevention to ensure our employees remain safe and our operations remain reliable."

As mRC informed earlier, the coronavirus disease 2019 (COVID-19) pandemic and the crude oil crash are interacting in complex ways to transform the propylene market. The sharp decline in crude oil pricing has lowered the cost of propylene feedstocks and flattened the production cost curve, he says. Indeed, naphtha cash costs have fallen low enough to be favored over liquefied petroleum gas (LPG).

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC