Chevron Phillips to shut multiple crackers ahead of Hurricane Laura's landfall: sources

MOSCOW (MRC) -- Chevron Phillips Chemical is shutting down its Port Arthur, Texas cracker in preparation for Hurricane Laura, reported S&P Global with reference to sources' statement Aug. 26.

The unit's capacity of 855,000 mt/year, according to S&P Global Platts Analytics data.

Chevron Phillips is also shutting down its Cedar Bayou, Texas, crackers ahead of the storm, sources said.

The company's Cedar Bayou crackers 1 and 2 have capacities of 837,000 mt/year and 1.7 million mt/year, respectively, according to Platts Analytics data.

Chevron Phillips was not immediately available for comment Aug. 26, but said in a filing Aug. 25 with the Community Awareness Emergency Response online system there will be flaring at the Baytown facility.

Chevron Phillips' Cedar Bayou site was inundated with up to eight feet of water when Hurricane Harvey hit Houston, Beaumont, and Port Arthur in late August and early September 2017. The National Weather Service expects significant storm surges along the southeastern Texas and southwest Louisiana coasts with Hurricane Laura as well, prompting operators to shut even if they are not in the storm's direct path.

"Better safe than sorry. They're probably going to lose power, so it's better to shut down, and then they can restart quickly," said Rob Stier, senior lead for S&P Global Platts Analytics.

ExxonMobil is reducing operating rates at its Baytown, Texas, crackers in preparation for Hurricane Laura, sources said.

The company has three crackers at its Baytown facility with capacities totaling more than 3.7 million mt/year, according to Platts Analytics data.

ExxonMobil was not immediately available for comment Aug. 26, but said in a CAER filing Aug. 25 that there will be flaring at its facility in preparation for the coming severe weather.

As MRC informed earlier, on 18 August, 2020, Chevron Corp reported a fire at its 112,229-barrel-per-day (bpd) Pasadena, Texas facility. "At this time, flames, smoke may be noticeable to the community. We are coordinating with local officials, and working to resolve the issue as soon as possible," the company reported on August, 19.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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.

Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.
MRC

MOSCOW (MRC) -- BP remains committed to its fast-growing US onshore shale business despite ambitious targets to slash its dependence on carbon-intensive oil and gas over the next decade, reported S&P Global with reference to the company CFO Murray Auchincloss' statement earlier this month.

The investment rationale for BP's US shale oil and gas assets "remains strong," with expected cost savings set to boost earnings from the business, Auchincloss told analysts on a strategy presentation.

BP has been increasing activity and optimizing operations at its US shale acreage purchased from mining giant BHP in 2018 for USD10.3 billion.

Oil production from the US shale business, known as BPX, has tripled to 127,000 b/d after the purchase of BHP's assets mostly in the Eagle Ford and Permian shale basins.

"The reservoirs are better than we thought," Auchincloss said, "We're finding more zones than we thought originally...and obviously, the capital is deflating these days, service rates are down so when we start drilling again, service rates are going to be an awful lot lower."

Auchincloss said BP also expects to find additional cost savings to the targeted USD400 million in synergies at the time of the acquisition.

BP has said spending curbs during 2020 due to the pandemic will reduce its production by 70,000 b/d of oil equivalent this year, with most of the reduction to occur at the company's BPX shale business.

BP said earlier it expects to see its upstream global production fall by at least 40% by 2030 as it spends less on exploration and development and sells off some producing assets.

During the second quarter of 2020, BPX's total production slipped to 364,000 boe/d, down from 499,000 boe/d in the year-ago period reflecting a 26% fall in its shale gas production as drilling almost halted amid the coronavirus pandemic.

Earlier this year, as MRC wrote previously, 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.

And 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 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.
MRC

MOSCOW (MRC) -- Most chemical production facilities in the region between Beaumont-Port Arthur, Texas, and Lake Charles, Louisiana, have shut down in preparation for Hurricane Laura, which was forecast to make landfall near the Texas-Louisiana border Wednesday night or early Thursday, reported Chemweek with reference to a bulletin issued this afternoon by IHS Markit.

Several olefin crackers and associated derivative polymer units have been shut down, as has about 2.5 million b/d of refining capacity.

About 10% of US ethylene capacity was already offline before the hurricane formed, and an additional 29% is being shut down. The units include those of BASF/Total at Port Arthur; CPChem at Port Arthur; Dow at Orange, Texas; ExxonMobil at Beaumont; FPC at Point Comfort, Texas; Indorama at Westlake, Louisiana, and Port Neches, Texas; Ineos at Chocolate Bayou, Texas; LACC at Lake Charles; Motiva at Port Arthur; Sasol at Westlake, Louisiana; and Westlake at Sulphur, Louisiana.

"Ethylene inventories were hovering above 5-years average before this event. So, while supply may be reduced in the short-term given the amount of capacity now offline, with several derivatives plants also shut down, the balance should be manageable," says IHS Markit. "Of course, this will ultimately depend on the severity of the hurricane and post hurricane safety inspections."

A host of associated derivative capacity is also being shut down, including 46% of US high-density polyethylene (HDPE) capacity, 31% of US linear low-density polyethylene (LLDPE) capacity, and 29% of US low density polyethylene (LDPE) capacity.

About 14% of polymer-grade propylene (PGP) and 16% of refinery-grade propylene (RGP) is also being taken offline.

"Propylene inventories have trended downward since beginning of July due to planned/unplanned outages from all sources, and the hurricane impact will further erode inventory to closer to the five-year average levels," says the report.

Downstream, 40% of US polypropylene (PP) capacity is being shut down.

Polyolefin units west of landfall could begin restarting as early as Friday, but rail logistics for shipment that typically go through New Orleans for interchange to East Coast destinations will be a problem, and the ports of both Houston and New Orleans are closed, delaying export, says IHS Markit.

"Both PE and PP inventories were at low inventory levels before the storm, so Hurricane Laura is expected to put further pressure on market supply through the near term," the bulletin notes. "Already one resin producer has declared force majeure for PE and PP products as a result of the hurricane."

About 28% of US ethylene oxide (EO) and 34% of US ethylene glycol (EG) capacity is being shut down. "The likely impact will be less EG available for export to Europe and Asia," says IHS Markit. "We may also see a reduction high-purity EO production while glycol rates are maximized to meet post-storm demand."

Two methanol plants in Beaumont, Texas, operated by OCI Beaumont and Natgasoline, respectively, are believed to be shut down. Units near Houston, Texas, and most derivative producers in the region are believed to remain online.

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

MOSCOW (MRC) -- Brazil’s Petroleo Brasileiro SA is set to receive binding offers for its Presidente Getulio Vargas refinery, with local firms Raizen and Ultrapar Participacoes SA among the likely bidders, reported Reuters with reference to sources familiar with the matter.

The sale is part of a multi-billion plan by the state-controlled oil company, known as Petrobras, to divest assets, with interest from ethanol and fuel distribution company Raizen and conglomerate Ultrapar powered by deep-pocketed foreign investment firms.

Based in the southern Brazilian state of Parana, Repar is Brazil’s fifth-largest refinery, able to process 208,000 barrels per day, representing 9% of the country’s capacity. It supplies the states of Parana, Santa Catarina, Sao Paulo and Mato Grosso, making it a good fit for both Ultra and Raizen, which have fuel distribution businesses in these areas.

Raizen, a joint venture between Royal Dutch Shell Plc (RDSa.L) and Brazilian ethanol producer Cosan SA (CSAN3.SA), is teaming up with US-based private equity firm Global Infrastructure Partners (GIP) to bid for various Petrobras refineries, Reuters reported in January. GIP has more than USD50 billion in assets under management.

Raizen declined to comment. Petrobras didn’t immediately reply to a request for comment.

Ultrapar could look to buy the refinery on its own or in a joint bid with Patria Investimentos Ltda, an investment fund backed by Blackstone Group Inc, which reached a 5% stake in the company in June, according to one source familiar with Ultrapar’s deliberations.

Ultrapar didn’t immediately reply to a request for comment. Patria declined to comment.

Another source said Petrobras was expecting additional offers for Repar, without naming potential bidders.

Indian conglomerate Essar Group had considered a bid in recent months, but it was not clear if the company would follow through, another source said. Essar didn’t immediately reply to a request for comment sent outside regular market hours in India.

The Parana unit is the second of a group of refineries that Petrobras is putting on the block as part of government efforts to bring more competition to the sector. Petrobras is in talks with Abu Dhabi investment firm Mubadala about finalizing an offer for the first refinery put up for sale, Rlam, in the northeastern state of Bahia.

Repar produces mostly gasoline and diesel, up to 70%, combined, as well as asphalt base, aviation fuel and butane gas. The unit is being sold with five storage terminals, one in Parana state and four in Santa Catarina, and 476 kilometers (295 miles) of oil pipelines.

As MRC reported previously, Petrobras may need more than a year to divest its stake in Braskem, said Andrea Almeida, Petrobras CFO, in early July. She said during the companyпїЅs recent webinar that Petrobras plans to give more time for potential investors to make offers for the company"s assets, including for its refineries and stakes at its petrochemical and fuel distribution affiliates. The divestment of Petrobras"s stake in Braskem in 2020 would be desirable but "might not be possible" as the COVID-19 pandemic has changed market conditions, she said. The company plans to close part of its refinery sales in 2021. In December, Roberto Castello Branco, CEO of Petrobras, said that he wants to sell the companyпїЅs stake in Braskem within a year. Petrobras owns 32.15% of Braskem.

We 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 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.

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

MOSCOW (MRC) -- Oil held near USD46 a barrel, close to its highest since March, lifted by US producers shutting most of their offshore Gulf of Mexico output ahead of Hurricane Laura and a report showing a drop in US crude inventories, according to Hydrocarbonprocessing.

Renewed worries over the COVID-19 pandemic, which has squeezed demand and sent prices to record lows in April, capped gains after reports this week of patients being re-infected, raising concerns about future immunity.

Brent crude slipped 6 cents, or 0.1%, to USD45.80 a barrel by 1230 GMT, while US West Texas Intermediate crude fell 16 cents, or 0.4%, to USD43.19. Both benchmarks settled at a five-month high on Tuesday.

“Oil traders will be preoccupied with the hurricane today,” said Tamas Varga of broker PVM. “Once the danger passes, demand considerations will come into focus again.”

The US energy industry was preparing on Tuesday for a major hurricane strike. Producers shut 1.56 MMbpd of crude output, representing 84% of the Gulf of Mexico’s offshore production and close to the 90% outage that Hurricane Katrina brought 15 years ago.

“We do see some support on the back of hurricane activity,” Dutch bank ABN AMRO said in a report. “The threat of being infected by the COVID-19 virus threatens a further recovery in oil demand.”

Oil was also boosted on Tuesday by U.S. and Chinese officials reaffirming their commitment to a Phase 1 trade deal. Further support came from American Petroleum Institute figures showing U.S. crude stocks fell more than expected.

A record oil output cut by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia has helped to lift Brent from April’s 21-year low below USD16.

The US government’s Energy Information Administration report at 1430 GMT will be in focus to see if it confirms the API figures.

As MRC wrote previously, several chemical producers are shutting down in advance of the hurricane, according to air emission event reports submitted to the Texas Commission on Environmental Quality (TCEQ). CPChem intends to shut down its Pasadena plastics complex, where the company has about 1 million metric tons/year (MMt/y) of polyethylene capacity. Motiva Chemicals is shutting down its steam cracker at Port Arthur, which has 0.7 MMt/y of ethylene capacity and 0.2 MMt/y of polymer-grade propylene (PGP) capacity. INEOS is shutting down its Olefins 1 steam cracker at Chocolate Bayou, which has 0.9 MMt/y of ethylene capacity and 0.3 MMt/y of PGP capacity.

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.
MRC