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US refining capacity poised for first big drop in nearly a decade

August 05/2020

MOSCOW (MRC) -- US oil refining capacity this year could decline by the largest amount in nearly a decade as pandemic-related travel curbs and a fire shut several plants, reversing years of small gains, reported Reuters.

Refiners globally have been idling plants as the COVID-19 pandemic slashed fuel demand as much as 30%. In the United States, Marathon Petroleum Corp will close California and New Mexico plants in response to the demand slump.

Philadelphia Energy Solutions closed and sold its refinery to a property developer after a fire and series of explosions tore through the plant last summer.

The three processed a combined 523,000 barrels per day of oil, or nearly 3% of total US refining, reducing capacity to 18.5 million bpd, according to Reuters calculations.

The last large drop was in 2012 when a refinery in the US Virgin Islands was shut, reducing overall capacity by 408,000 bpd. An investor group acquired the plant and aims to restart it this year, which would add 200,000 bpd, and could dampen the sharp fall in capacity.

But the pandemic also is rolling back planned additions and some analysts think additional plants may close. Exxon Mobil Corp recently delayed until 2023 an expansion of its Beaumont, Texas, refinery that would nearly double its capacity.

Past recessions temporarily cut growth, but this years sharp drop likely will halt expansions for some time, said David Hackett, president of fuels consultancy Stillwater Associates.

COVID-19 has taught us people really can work from home, he said, estimating demand for motor fuels could remain depressed through 2021.

US refiners increased overall capacity most years even as the number of refineries has fallen since 1981. Total capacity last fell by more than half a million bpd in 1992 when 575,000 bpd was lost following the 1990-1991 recession.

Overall gains could resume in 2021, said John Auers, an executive vice president at oil and petrochemical consultants Turner, Mason & Co.

But he cautioned a return to historical annual increases will really be driven by the ability to grow exports of gasoline, diesel and jet fuel.

As MRC wrote before, ExxonMobil Corp is preparing deep spending and job cuts, according to people familiar with the matter, as it fights to preserve a 8% shareholder dividend with a multi-billion-dollar quarterly loss looming. It was unclear how extensive the cuts will be. The largest US oil company slashed this years budget by 30% in April, but Chief Executive Darren Woodss turnaround through rebounding demand and increased asset sales have not panned out and losses are climbing.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Exxon Mobil Corporation, doing business as ExxonMobil, is an American multinational oil and gas corporation headquartered in Irving, Texas. It is the largest direct descendant of John D. Rockefeller's Standard Oil, and was formed on November 30, 1999 by the merger of Exxon (formerly the Standard Oil Company of New Jersey) and Mobil (formerly the Standard Oil Company of New York). ExxonMobil's primary brands are Exxon, Mobil, Esso, and ExxonMobil Chemical. ExxonMobil is incorporated in Texas. One of the world's largest companies by revenue, ExxonMobil from 1996 to 2017 varied from the first to sixth largest publicly traded company by market capitalization. ExxonMobil is one of the largest of the world's Big Oil companies.


mrcplast.com
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, homopolymer PP, propylene, HDPE, ethylene, petrochemistry, Exxon Mobil, Russia, USA.
Category:General News
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