Sinopec ZRCC unexpectedly shut PE and MEG plants

MOSCOW (MRC) -- Sinopec Zhenhai Refining & Chemical Company has unexpectedly shut its high density polyethylene (HDPE)/linear low density polyethylene (LLDPE) swing plant and monoethylene glycol (MEG) plant due to technical glitches on its ethylene unit on 16 April, 2020, reported CommoPlast with reference to market sources, .

Based in Zhenhai, China, the plant has a 450,000 tons/year HDPE/LLDPE plant and 650,000 tons/year MEG plant.

Both plants are expected to remain shut for 7 days.

Meanwhile, the company's 620,000 tons/year styrene monomer (SM) plant and 500,000 tons/year polypropylene (PP) plant are running at reduced rate. A source closed to the company informed that they are currently outsourcing propylene temporarily to continue production at lower rate.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers.

MEG is one of the main feedstocks for the production of polyethylene terephthalate (PET).

As per MRC's ScanPlast report, Russia's estimated PET consumption decreased to about 53,890 tonnes in February 2020, down by 3% year on year. 100,830 tonnes of PET chips were processed in Russia in the first two months of 2020. February PET production in Russia dropped to 45,800 tonnes, down by 5% year on year. Russia's overall PET production fell in January-February 2020 by 13% year on year.
MRC

Canada cuts steam-driven oil projects, risking permanent damage

MOSCOW (MRC) -- Canada’s steam-driven oil facilities are bearing the brunt of output cuts as the industry copes with low prices, and deeper reductions may risk permanent damage to the sites, said Hydrocarbonprocessing.

The COVID-19 pandemic has severely cut fuel demand as the global economy slows, leading refiners to reduce purchases of crude. Canada, the world’s fourth-largest oil producer, has started slashing production, but analysts say the biggest cuts lie ahead.

Steam-assisted gravity drainage (SAGD) projects heat seams of tarry bitumen and account for nearly half of Canadian oil sands production. Maintaining temperature and pressure is necessary to keeping the reservoir in shape for future production.

ConocoPhillips on Thursday became the latest producer to cut Canadian steam-driven production, chopping 100,000 barrels per day (bpd). "Shutting down those (sites) sounds a lot easier than it actually is,” Alberta Premier Jason Kenney told reporters on Wednesday, when asked about closing such sites to avoid spreading coronavirus infections. “It can cause permanent damage to their reservoir and jeopardize billions of dollars of assets."

Husky Energy and Cenovus Energy have also made cuts to steam-driven production, estimated at 15,000 bpd and up to 45,000 bpd respectively. Such sites face cuts because they produce bitumen, a form of heavy oil that requires the added cost of blending with ultra-light oil to move it through pipelines, said Matt Murphy, upstream analyst at Tudor Pickering Holt & Co.

Canada has cut oil sands output by more than 300,000 bpd, and total shut-ins may grow to 1.5 million, TD analyst Menno Hulshof said in a note. The higher estimate represents nearly one-third of Canadian output. Up to 80% of SAGD volumes may be curtailed, Hulshof said.

ConocoPhillips intends to reduce volumes to the lowest level possible without damaging its reservoir. “We’re not going to shy (from restoring production) if we see any risk to reservoir damage or anything that’s going to impair our ability to bring it back,” Chief Operating Officer Matt Fox told analysts.

Cenovus is confident that it can safely adjust production, as it has done so previously, spokeswoman Sonja Franklin said. Companies can manage risks by injecting some steam during curtailments to maintain pressure, Murphy said.

Mines also face cuts. Suncor Energy has cut output sharply at its Fort Hills mine, about 85,000 bpd, according to Murphy.

Imperial Oil plans to curtail output first at its Kearl mine, if necessary, because it can modulate production more easily than its Cold Lake SAGD site.

Canadian Natural Resources, by contrast, would keep mines running even in a price “meltdown” because they produce lighter synthetic crude at lower cost, President Tim McKay said last week.

As MRC informed earlier, ConocoPhillips said it would cut gross production by 225,000 barrels of oil per day while also suspending its share repurchase program and cutting back further on capital spending to weather the collapse in oil prices. Oil and gas producers have sunk deep into crisis mode over the past month as the slump in demand caused by coronavirus lockdowns left the world’s big producers producing far more than current needs and crude prices falling below USD30.

According to MRC's ScanPlast report, 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

Shell plans fall maintenance program at Moerdijk, Netherlands

MOSCOW (MRC) -- Shell is planning to undertake heavy maintenance work this fall at parts of its petrochemical complex at Moerdijk, Netherlands, reported Chemweek with reference to the operator and OPIS sources.

Turnaround work has been scheduled to coincide with maintenance work later this year at Shell’s petchem operations in Germany, a source tells OPIS. Postponed maintenance at the 300,000-metric tons/year steam cracker at Shell’s plant at Wesseling, Germany, will now take place in August and last several weeks, according to IHS Markit’s chemicals division.

A statement on the Shell Moerdijk website confirms that maintenance work at the Netherlands plant has been delayed.

"In consultation with relevant external parties, it has been decided to postpone the major maintenance shutdown of one of our factories planned for May until immediately after the summer," the statement reads. "Shell Moerdijk is an essential link in the ‘Rotterdam-Belgium-Germany’ chain. The postponement of major maintenance along this line led to our decision to postpone the (Moerdijk maintenance) as well. In this way, we ensure that, during these coronavirus times, there are no kinks in vital processes and product deliveries," it says. A spokesman for Shell declined to add further comment.

Shell’s Moerdijk facility is one of Europe’s largest petrochemical plants, with many of its operations integrated with the company’s nearby 404,000-b/d Pernis plant, which is Europe’s largest refinery. Shell began a major turnaround at Pernis last week.

OPIS is an IHS Markit company.

As MRC wrote before, Royal Dutch Shell said it is planning a major maintenance turnaround at its Pernis oil refinery in the Netherlands starting on May 4, 2020.

We also remind that Shell Singapore restarted its naphtha cracker in Bukom Island this week 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 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

Marathon says it will idle Martinez, California refinery

MOSCOW (MRC) -- Marathon Petroleum Corp will idle its 166,000 barrel-per-day (bpd)refinery in Martinez, California beginning April 27 in response to the coronavirus pandemic’s hit to demand for refined products, reported Reuters with reference to a company official.

The company did not provide further comment on the likely duration of the idle, but said it intends to return the plant to normal operations once demand levels support doing so.

The Martinez plant is the second in the United States and third in North America to temporarily cease operations in response to the plummeting demand for products such as gasoline and jet fuel amid severe travel restrictions in place to help slow the spread of the coronavirus.

Marathon previously announced it would idle its 26,000 bpd refinery in Gallup, New Mexico.

North Atlantic Refining has also idled its 130,000 bpd refinery in Come-by-Chance, Canada.

Earlier this year, 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.

As MRC informed previously, Marathon Petroleum Corp plans to operate the gasoline-producing fluidic catalytic cracker (FCC) at its 585,000 barrel-per-day (bpd) Galveston Bay Refinery in Texas City, Texas. The 140,000 bpd FCC restarted on Sunday, 12 April, after repairs following a March 23 brief power outage that shut the unit.

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

US diesel market starts to show weakness, follows gasoline

MOSCOW (MRC) -- The US diesel market is weakening as the nation’s economy crashes, cutting demand for the refined product that had until recently been a lifeline for refiners dealing with the sharp fall in gasoline and jet fuel consumption, reported Reuters.

US demand for diesel, which fuels farming equipment and trucks that haul goods across the country, had held up relatively well as governments ordered residents to shelter in homes to curb the spread of the new coronavirus that has killed more than 30,000 people nationwide.

Refiners responded to trucking and farming demand by increasing their slate of diesel as processing margins remained higher.

However, diesel consumption is falling now as well. The four-week average of diesel product supplied - a proxy for consumption - fell to just under 3.9 million barrels per day last week, lowest for the start of April since 2016, Energy Information Administration data showed on Wednesday.

That represents an 8% decline from the year-ago period. Gasoline demand, by contrast, is off by 32% in that same time period. Wednesday’s figures for last week showed diesel demand fell by 28% - which, if it persists, shows that deliveries may be starting to decline as the economic pain deepens.

"With job losses mounting, there are nearly guaranteed fewer goods being transported by trucks," said Patrick De Haan, head of petroleum analysis at GasBuddy. "It’s a bellwether for the economy, and it doesn’t look good."

Margins to refine distillates HOc1-CLc1 have fallen since the end of March and now sit at USD18.43 a barrel, lowest since 2017, Refinitiv Eikon data showed.

Fuel demand has dropped by roughly 30% nationwide, and numerous refiners are idling units and cutting runs to deal with the excess product. But their shift to producing more diesel is increasing supply, a concern as storage space dwindles. Distillate inventories rose to 129 million barrels, the most seasonally since 2017, the EIA said.

In the Midwest, where diesel use is heavy in planting season, storage has started to become an issue, traders said.

"There’s still storage, but we’re near all-time highs," one market participant said about the Group Three market, which serves the Midwest.

That is translated to lower prices in the spot market. Chicago ultra-low sulfur diesel cash differentials this week fell to 26 cents a gallon below futures, lowest seasonally since 2012.

In the Gulf Coast, prices fell to 8.75 cents a gallon below futures, also the lowest since 2012.

As MRC reported earlier, global oil consumption cut by up to a third. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.

We remind that earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

We also remind that, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

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