U.S. refiners talk up renewable projects after a year of lousy fuel demand

MOSCOW (MRC) -- Following a year of grim losses amid pandemic lockdowns that dented demand for fuel as people stuck close to home, the largest U.S. independent refiners are promoting plans to boost production of renewable fuels, said Hydrocarbonprocessing.

Renewable fuels represent a silver lining for refiners under threat of being left behind by the shift to electric vehicles and away from fossil fuel processing. As the big refining companies in recent days reported year-end results, executives devoted plenty of time to discussing how they will create fuels that emit fewer emissions that contribute to global warming.

"Renewables is the hot topic, and I think we're in a real good position to put ourselves in a good spot there," Marathon Petroleum Chief Executive Mike Hennigan said. Marathon reported losses of USD12.2 billion for 2020. Hennigan said the company isn't clear what gasoline and diesel demand will be post-pandemic.

The company is currently converting its Martinez, California, refinery to renewable fuels, with plans to spend nearly all of its USD350 million 2021 renewables budget on that refinery, which was idled last year. Marathon's Dickinson, North Dakota, refinery, started producing renewable fuels sold in California late last year.

Currently, refiners make the most money selling into California as the state's low carbon fuel standard encourages the production of renewable diesel, which is subsidized by federal and state policies. Notably, renewable diesel was the only segment that turned a profit for Valero Energy in 2020. The company, the second largest independent U.S. refiner, lost USD1.4 billion for the year, but its renewable diesel segment posted a USD638 million profit.

"The reality is that cleaner fuels are going to be part of the future. ... The internal combustion engine is far from being extinct," Valero's chairman and CEO, Joe Gorder, said on an earnings call last week. Valero and partner Darling Ingredients are planning a USD1.45 billion facility in Port Arthur, Texas, that will be able to process 1.2 billion gallons of renewable diesel per year from sites in Texas and Louisiana.

Phillips 66 reported result, posting a USD4 billion loss for 2020. It, too, talked up its plans to produce renewable fuels at its former Rodeo refining plant in San Francisco, and a joint venture with Ryze Renewables in Nevada to produce renewable diesel. "We want to participate in energy transition. We want to do it where we can invest and earn returns that are above our weighted average cost of capital," said Greg Garland, Phillips 66 chairman and CEO.

As MRC informed 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 DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
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MOSCOW (MRC) -- Chevron Phillips Chemical (CPChem; The Woodlands, Texas) reported fourth-quarter net income of USD383 million, up 29% year over year (YOY) from USD296 million, according to Chemweek with reference to data released by Phillips 66.

CPChem is a 50-50 joint venture between Phillips 66 and Chevron.

The olefins and polyolefins segment turned in net income of USD410 million, up 56% YOY from USD262 million. Segment capacity utilization was 101%, up from 97% in the year-ago period. Citing data from IHS Markit, Phillips 66 says the industry ethylene to high-density polyethylene chain cash margin for the quarter was 27.5 cents/pound (lb), versus 16.5 cents/lb in the year-ago period.

The specialties, aromatics, and styrenics segment turned in net income of USD30 million, down 57% YOY from USD70 million.

As MRC reported earlier, in January 2021, CPChem announced two significant developments in its advanced recycling program which converts waste plastics into circular polyethylene (PE).

We remind that in March 2018, Chevron Phillips Chemical, part of Chevron Corp, successfully introduced feedstock and commenced operations of a new ethane cracker at its Cedar Bayou facility in Baytown, Texas. At peak production, the unit will produce 1.5 million metric tons/3.3 billion lbs. per year. This unit is one of the largest and most energy efficient crackers in the world. In September 2017, the company announced the successful commissioning and start-up of two new Marlex polyethylene (PE) units in Old Ocean, Texas, based on the company’s proprietary MarTech technologies. Together, these assets form the bulk of the company’s US Gulf Coast Petrochemicals Project (USGCPP), which was first announced in 2011.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

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) -- Chemical rail traffic in North America closed January strong, pushing year-to-date volume up 5.7% from 2020 and 5.5% from 2019, said Chemweek.

During the week ended 30 January, volume totaled 48,312 carloads, up 5.2% from the previous week and up 4.4% year-over-year (YOY), according to data released by the Association of American Railroads (AAR). On a four-week basis, volume increased 5.6% from 2020 and 3.7% from 2019 (chart).

Chemical railcar traffic in the US contributed 34,023 carloads to the total, up 3.0% YOY and up 5.9% from the previous week. For the year to date, US chemical railcar traffic is up 4.4%.

Canadian chemical rail traffic totaled 13,310 carloads, up 8.3% YOY and up 3.6% from the previous week. For the year to date, Canadian chemical railcar traffic is up 9.8%.

Chemical railcar traffic in Mexico totaled 979 carloads, a YOY increase of 2.3% and a sequential increase of 2.8%. For the year to date, Mexican chemical railcar traffic is up 1.7%.

As MRC informed previously, oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, according to an official with International Energy Agency's (IEA) statement.

We remind that the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We also remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).

MRC

MOSCOW (MRC) -- Brazil’s state-controlled oil company Petroleo Brasileiro SA said it had agreed to sell its RLAM refinery to Abu Dhabi’s Mubadala Capital for USD1.65 billion, subject to regulatory approval, reported Reuters.

Petrobras, as the company is known, also said it would not sell its REPAR refinery, in the southern state of Parana, at the current time as it considered the bids too low. It did not elaborate further but said, without giving a timeline, that it will begin a new sales process for REPAR.

Reuters reported earlier that both Ultrapar Participacoes SA and Raizen, a joint venture between Royal Dutch Shell PLC and Brazilian ethanol producer Cosan SA, had bid for REPAR.

According to antitrust rules, as Petrobras picked Ultrapar to lead negotiations for the sale of its REFAP refinery in Rio Grande do Sul state, in the same region as REPAR, its only option would be to sell REPAR to another competitor, in this case Raizen.

Petrobras said the process to divest REFAP, as well as five other refineries, namely RMAN, RNEST, REGAP, LUBNOR and SIX, was ongoing.

As MRC informed before, Brazil’s state-run oil company Petrobras is seeking 800 million reais (USD152 million) in compensation from engineering group Odebrecht in arbitration proceedings over its alleged violation of the shareholders agreement in petrochemical company Braskem.

We remind that Petrobras may need more than a year to divest its stake in Braskem, said Andrea Almeida, Petrobras CFO, in early July, 2020. She said during the company's 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 company's stake in Braskem within a year. Petrobras owns 32.15% of Braskem.

We also 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 ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

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) -- State-owned oil supplier CPC Corporation is aiming to start its residual fluid catalytic cracker (FCC) in Taiwan on February 8, reported S&P Global.

The steam cracker has the capacity to produce 450,000 mt/year of propylene.

It was shut on January 19, 2021, due to technical issues.

As MRC wrote before, in January, 2021, CPC Corp bought a piece of land in Kaohsiung on which it plans to build a new naphtha cracker to replace its No. 4 cracker at a cost of NTD82.3 billion (USD2.94 billion). CPC's No. 4 cracker in Kaohsiung's Linyuan District has been in operation for 37 years and has an annual ethylene production capacity of 380,000 metric tons, which cannot meet the demand of its customers, CPC spokesman Chang Ray-chung said.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).

CPC Corporation, Taiwan, is engaged in the exploration, production, refining, procurement, transportation, storage, and marketing of oil and gas. The company provides fuel oil, including automotive unleaded gasoline and diesel fuel, low-sulfur fuel oil, marine distillate fuels, marine residual fuels, and aviation fuel; petrochemicals, such as ethylene, propylene, butadiene, benzene, para-xylene, and ortho-xylene; liquefied petroleum gas products comprising liquefied petroleum gas, propane, butane, and a propane/butane mixture; lubricants, motor oil, industrial oil, grease, and marilube oil; SNC products, including petroleum ether, naphtha, toluene, xylene, crude octene, methyl alcohol, normal paraffin, viscosity-graded asphalt cement, and sulfur; and natural gas.
MRC