Chevron to stay wedded to shale, for 'incredible flexibility': CEO

MOSCOW (MRC) -- Chevron CEO Mike Wirth on Oct. 13 defended the company's commitment to shale and said its upstream portfolio would remain weighted toward tight oil and gas, with fewer large, non-shale projects than in the past, while he acknowledged a less "enthusiastic" outlook for the shale sector generally, reported S&P Global.

Speaking during the Energy Intelligence Forum, previously Oil & Money, Wirth said he did not foresee US crude oil production getting back in the next couple of years to its record highs of 13 million b/d before the coronavirus pandemic.

He also said the major's entry into Israel, with the recent purchase of Noble Energy, fit with a trend toward more cooperation in the region, apparently referring to recent diplomatic moves in the Middle East, as well as multiple opportunities to meet gas demand.

Wirth said shale had fundamentally reset Chevron's financial framework, noting the company had cut its annual capital expenditure from USD40 billion in 2014 - with no growth in the company - to USD20 billion going into the latest crisis in markets, and now closer to USD12 billion, with the company on a growth path.

"From USD40 billion to USD12 billion a year (shows) incredible flexibility on capital, lower capital intensity, and we've got the ability to adjust our program to meet market conditions on a much more contemporaneous cycle," Wirth said.

"We found ourselves in the last decade with many multibillion-dollar, multiyear investments which were hard, challenging, and the industry's experience broadly was not good," Wirth said.

"We'll always have room for some of these large, long-cycle projects," he said, noting the challenges of an expansion project at the Chevron-led Tengiz field in Kazakhstan, which has been hit by cost rises and coronavirus outbreaks. Deepwater projects in the Gulf of Mexico that could be tied into existing infrastructure would also remain attractive, but stand-alone "greenfield" projects less so, Wirth said.

On "long-cycle" investments generally, he said, "We won't find ourselves weighted or over-weighted to those -- In the foreseeable future I think it will be quite the opposite."

"We'll continue to prefer a pretty significant weighting on shorter cycle things that frankly offer higher returns and more flexibility," Wirth said, noting Chevron's shale activity now extends to Canada and Argentina, which he said had become "increasingly competitive as we acquire the learnings."

When it comes to non-shale projects, "Number 1 is you do fewer of them so you can focus more attention on the ones that you're executing, you can have your very best people working on these," he said. "We've got to learn how to really scope things well and prepare well for execution on these."

Wirth acknowledged the change in investors' view of shale even before COVID-19, saying that looking ahead, "We certainly won't see an upturn in activity and the commensurate production response as we come out of this."

"Demand questions are weighing heavily on the market, the capital discipline that the industry has lacked is beginning to re-emerge."

"Investors are holding the industry accountable. You will see the eventual resumption of development in the US being done in a less enthusiastic way, a more disciplined way. I think that means a shallower growth curve.... Whether or not that gets back to 13 million b/d, I don't think it does in the next couple of years," he said.

Speaking after Chevron completed its purchase of Noble Energy, and as the Trump administration has promoted a diplomatic thaw between Israel and a number of countries in the Gulf region, Wirth said he saw strong prospects for the Israeli gas resources that came with the Noble purchase.

"We think it's a good quality resource in a good place. The trends in that part of the world seem to be towards more cooperation. It's not without challenges, its not without differences of opinion among certain countries, but in general the ties between countries are moving in a positive direction," Wirth said.

"These things aren't a straight line (but) we see a lot of positives to support the development of commercial ties between countries and energy can be a very important component of that," Wirth said, adding he saw opportunities for Israeli gas exports both by pipeline and as LNG.

"There is existing pipe infrastructure into certain markets," he said, referring to pipeline links to Egypt and Jordan. "There are LNG facilities that are not far from some of these resources that have capacity. I don't think it's an either-or. I think it's probably some combination of the two over time that we'll see as the pathway to markets and commercialization," Wirth said.

As MRC reported earlier, Chevron Phillips Chemical, part of Chevron Corporation, still has not lifted force majeure on its polyethylene (PE) products after assessing the impact of Hurricane Laura to its Gulf Coast PE operations. The force majeure circumstances were declared on 1 September, 2020. CP Chem operates a 420,000 mt/year high-density polyethylene (HDPE) plant in Orange, Texas, and an 855,000 mt/year cracker in Port Arthur. The company plans to minimize the impact of the event and return to full PE deliveries as soon as possible.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

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

Hurricane Delta impacts on chemical facilities appear less serious than Laura

MOSCOW (MRC) -- Hurricane Delta appears to have wreaked minimal damage to chemical facilities in Lake Charles, Louisiana, just six weeks after Hurricane Laura blew through the region, severely damaging major electricity transmission lines that left facilities offline for weeks, reported S&P Global.

Westlake Chemical said in a statement on Oct. 12 that initial assessments after Delta's Oct. 9 landfall showed "very limited physical damage" to its Lake Charles complex, and facilities were "in the process of restarting."
The timing of those restarts depends on restoration of electrical power, industrial gases and other feedstocks and utilities, the company said.

Sasol said Oct. 12 that its Lake Charles complex "did not experience significant damage" and that sufficient industrial-level power had been restored to resume startups of some facilities." Additional plants will startup once full load power is restored," the company said in a statement.

"We will resume the coordinated startup sequence of Sasol's Lake Charles facilities when it is safe to do so," the company said, noting, like Westlake, that startups depend on availability of electric power and feedstocks.

LyondellBasell and Lotte Chemical did not immediately respond to inquiries about the status of their Lake Charles operations on Oct. 12.

Delta came ashore as a Category 2 storm with 100 mph winds in early evening Oct. 9, weakening as it swiftly moved inland on a path near Hurricane Laura's Aug. 27 landfall.

Laura was a Category 4 storm with 150 mph winds, and came ashore about 15 miles east of Delta's landfall. Laura severely damaged major electricity transmission lines in Lake Charles, leaving major chemical facilities there shut down in September, awaiting restoration of full load power to allow comprehensive damage assessments of their systems.

Force majeures declared in Laura's aftermath remained in effect on Oct. 12.

Entergy, the power provider that serves southwest Louisiana, said on Oct. 12 that power should be restored for the Sulphur and Westlake areas of Calcasieu Parish by Oct. 13-14, and in the Lake Charles area Oct. 15-16.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

Ufaorgsintez resumes PP production

MOSCOW (MRC) -- Ufaorgsintez (UOS, Bashneft’s petrochemical asset) has resumed its polypropylene (PP) production after a shutdown for maintenance, according to ICIS-MRC Price report.

The plant's customers said Ufaorgsintez had resumed its PP output since 13 October after the shutdown for a scheduled turnaround. The outage was quite long and started on 12 September. Ufaorgsintez's overall PP production capacities are 120,000 tonnes/year.

It is also worth noting that Poliom shut its production with the capacity of 230,000 tonnes per year on 2 October.

PJSC Ufaorgsintez produces phenol, acetone, synthetic ethylene-propylene rubber, high and low pressure polyethylene, polypropylene, more than 30 types of petrochemical products and over 25 consumer products.
MRC

Sinopec Zhongke shut No. 1 PP unit on technical difficulties

MOSCOW (MRC) -- Sinopec Zhongke Refinery and Petrochemical has unexpectedly taken its No. 1 polypropylene (PP) unit in Guangdong Province offstream on 12 October 2020 - just a week after recovering from the earlier explosion at the ethylene oxide (EO) line that affected the entire complex, reported CommoPlast.

The No. 1 PP line has an annual capacity of 350,000 tons/year.

Meanwhile, the No. 2 PP unit with 200,000 tons/year output are operating at stable rates.

Zhongke Refinery and Petrochemical has been attempting to start-up the newly constructed plant since June 2020. The producer might need more time to reach stable production.

As MRC wrote previously, Sinopec Zhongke Refinery and Petrochemical started selling first lots of on-spec PP materials in the open market with limited quantity from its new plant in China in early September, 2020. The company successfully completed the trial run at its newly constructed PP plant, consisting of two lines, and proceeded to commercial production within the month of August.

Thus, No. 1 PP unit with an annual capacity of 350,000 tons/year started producing commercial cargoes on 18 August 2020. The initial output might be homo-PP yarn before the company switches to PP fiber grades. And No. 2 PP line with nameplate capacity of 200,000 tons/year was scheduled to produce commercial cargoes on 24 August 2020, making homo-PP injection and high MI PP copolymer.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group"s key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
MRC

ECHA welcomes EU sustainable chemicals strategy, offers help with implementation

MOSCOW (MRC) -- The European Chemicals Agency (ECHA; Helsinki, Finland) has welcomed the European Commission’s EU Chemicals Strategy for Sustainability and says it looks forward "to supporting its implementation," according to Chemweek.

With its scientific and technical competency, the ECHA can play a key role in the various actions outlined in the strategy to work towards a toxic-free environment to protect people and the environment from hazardous chemicals, it says.

The ECHA can play its part in making the strategy a success by "supporting the Commission and EU member states, together with our stakeholders," says Bjorn Hansen, executive director at ECHA.

The agency can contribute in three areas in particular, namely collecting, publishing and evaluating data on chemicals to stimulate innovation towards safer alternatives; ensuring that laws are implemented more efficiently and consistently; and speeding up chemicals risk management in the EU, Hansen says.

As MRC wrote before, on 15 October, The European Commissionadopted the EU's chemicals strategy for sustainability, describing it as the first step towards a zero-pollution ambition for a toxic-free environment announced in the European Green Deal.

We remind that in mid-July, 2020, The European Commission approved PKN Orlen’s acquisition of Grupa Loto. The approval is conditional on full compliance with a commitments package offered by PKN Orlen.

We also remind that n H1 September 2019, Honeywell announced that PKN ORLEN had licensed the UOP MaxEne process, which can increase production of ethylene and aromatics and improve the flexibility of gasoline production. The project, for the PKN Orlen facility in Plock, Poland, currently is in the basic engineering stage. Honeywell UOP, a leading provider of technologies for the oil and gas industry, first commercialized the UOP MaxEne process in 2013. The process enables refiners and petrochemical producers to direct molecules within the naphtha feed to the processes that deliver the greatest value and improve yields of fuels and petrochemicals.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC