MOSCOW (MRC) -- US Midwest refiners are gearing up to send more gasoline and diesel to East Coast buyers, hoping to fill a void created by refinery closures and cutbacks, but likely to add pressure to regional fuel producers, reported Reuters.
Midwest refiners, such as BP and Husky Energy, that process inexpensive Canadian crude are betting on East Coast markets to boost sales and margins. But the move could make it more difficult for PBF Energy to restore production of gasoline, diesel and jet fuel at its Paulsboro, N.J., plant.
“The midwest refining complex is a firehose to the East Coast, which is already drowning in imports,” said Zachary Rogers, senior oil analyst at consultancy Rapidan Energy Group.
Shippers are geared up to transport up to 25,000 barrels per day (bpd) of refined products on the Mariner 1 pipeline from the Midwest as soon as this week, two traders familiar with the matter said. If demand permits, refiners could double that amount, they said.
“We do expect that this service will help to lower overall fuel costs for Pennsylvania residents and business,” said a spokeswoman at Energy Transfer, which operates Mariner 1. Volumes of between 20,000 bpd and 25,000 bpd will begin this month, she said.
Gasoline prices in the Midwest traded 4 cents a gallon below the futures benchmark for gasoline on the New York Mercantile Exchange on Tuesday while New York Harbor conventional gasoline prices were 3.25 cents above the futures benchmark.
East Coast refineries produce only part of the fuel consumed in the region, with pipeline and seaborne imports furnishing most. Three refineries, owned by Delta Airlines, PBF Energy and Phillips 66, produce 700,000 bpd combined out of the 5.2 million bpd of gasoline, diesel, and jet fuel consumed last year, Energy Information Administration data shows.
The largest refiner, Philadelphia Energy Solutions, halted operations following a 2019 explosion, Canada’s Come-by-Chance, which sold fuel into the East Coast, was idled in May, and PBF Energy said in October it would shut fuel-producing units at its 180,000 bpd Paulsboro refinery.
PBF did not reply to a request for comment.
As MRC wrote before, in October 2020, US refiner Phillips 66 said it plans to reconfigure its refinery in Rodeo, California to produce renewable fuels from used cooking oil, fats, greases and soybean oils.
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 ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.
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