Twin US Gulf Coast storms stir deep production cuts by energy giants

MOSCOW (MRC) -- Energy companies are weighing production cuts at U.S. Gulf Coast oil refineries after shutting half the area’s offshore crude oil output ahead of back-to-back storms aiming for the coast this week, reported Reuters.

Tropical Storms Marco and Laura, a rare double-team approach to the US Gulf Coast, threaten days of heavy rains and strong winds this week. Firms had shut wells accounting for 1 million barrels per day of oil on Sunday, as one storm is forecast to become a damaging Category 2 hurricane.

Oil prices on Monday rose 1% to USD44.83 a barrel on hopes for a COVID-19 vaccine and despite lackluster demand for fuels amid economic declines from the pandemic. The Louisiana Offshore Oil Port, the largest Gulf Coast oil-export facility, halted operations at its marine terminal.

At least one top refiner is weighing a shutdown for the larger and potentially more damaging Storm Laura, which is forecast to strike the Texas/Louisiana coast by Thursday as a Category 2 hurricane with 105 mile per hour (169 km/h) winds and heavy rain. Some meteorologists say the storm could strengthen to a major hurricane before it makes landfall.

Operators including Exxon Mobil, Valero and Royal Dutch Shell are planning to maintain operations at Louisiana plants as the first cyclone arrives Monday, sources familiar with plans at those refineries said. Storm Marco is expected to drop up to 5 inches (12.7 cm) of rain along the Louisiana coast.

Refineries in east Texas including those operated by Exxon, Valero, Total and Motiva are weighing plans for Storm Laura when it hits the Texas-Louisiana border.

Motiva Enterprises may shut the largest crude oil refinery in the United States, people familiar with plant operations said. Its 607,000 barrel-per-day (bpd) refinery in Port Arthur, Texas, could be drenched by both storms, the people said.

During 2017’s Hurricane Harvey, which occurred three years ago this week, five feet (1.52 meters) of rain fell on east Texas, forcing Motiva to halt operations for nearly two weeks and others to take shorter shut-downs.

That storm led Motiva, which is owned by the world’s top oil producer Saudi Aramco, to cancel plans to expand the refinery.

As MRC informed earlier, Motiva is evaluating opportunities to build a new polyethylene (PE) line within its proposed steam cracker and aromatics project in Jefferson County, Texas. The new PE capacity will be located at the company’s Port Arthur Refinery Complex in Jefferson County, Texas. The planned capacity of the unit was not specified, while the value of the project is reportedly estimated at around USD3.1 billion.

Besides, in late 2019, Motiva Enterprises acquired 100% of Flint Hills Resources chemical plant, adjacent to its Port Arthur, Texas, oil refinery. The Flint Hills plant operates a 1.57 billion-pound-per-year ethylene cracker, a unit producing nylon component cyclohexane, and a network of pipelines and storage caverns. Saudi Aramco, in its IPO prospectus, said the cash payment will be determined as per the project value at SAR 7.13 billion (USD1.9 billion).

Ethylene and propylene are feedstocks for producing 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) -- EMS Group (Domat, Switzerland), a producer of high-performance polymers and specialty chemicals, reports first-half 2020 results that deviate slightly from the provisional results it announced in July, according to Chemweek.

The company says net income declined 27.8% year on year (YOY) to 192 million Swiss francs (USD211 million) on sales that fell 26.8% YOY to SFr845 million. EBITDA and EBIT also went down 26.4% and 28.2%, to SFr254 million and SFr227 million, respectively.

Sales in the company's high-performance polymers division were 27.1% lower YOY at SFr741 million, with EBIT down 28.6% to SFr200 million. The specialty chemicals division recorded a 24.6% YOY drop in sales to SFr104 million, with EBIT of SFr27 million, 25% less than the prior-year period. The company’s net liquidity increased by SFr167 million, or 24% YOY, to SFr863 million, it says.

EMS expects the impact of COVID-19 to last throughout 2020 and says that, depending on “the respective epidemiologic and financial state measures,” it is possible “that sudden and selective periods of growth or slumps will occur and that these may be accompanied by currency shifts.” As a result, EMS continues to expect EBIT for 2020 to be less than in 2019, it says.

As MRC reported earlier, Merck KGaA says it plans to build an EUR18-million (USD20.6 million) laboratory facility at Buchs, Switzerland, to support its rapidly growing reference materials business. The facility will include laboratory and office space in a three-story, 1,125-square-meter building, Merck says. Completion of construction is scheduled for December 2021 and the move to the facility is planned for early 2022, the company says. Merck anticipates that about two dozen jobs will be created.

We remind that after the May fall in June, Russia"s output of products from polymers rose by 16.9% due to the easing of quarantine restrictions and seasonally stronger demand. However, this figure increased by 1.3% year on year in the first six months of 2020.
MRC

MOSCOW (MRC) -- Petronas Chemicals Group Bhd (PCG) has entered into a strategic partnership with LG Chem Ltd to build a nitrile butadiene latex manufacturing plant at Pengerang Integrated Complex (PIC) in Johor, according to New StraitsTimes.

The integrated chemicals producer said the partnership was timely amid a period where the demand for nitrile gloves was growing rapidly.

"In addition, the collaboration will create new revenue streams and unlock new markets by optimising resources in both companies.

"At the same time, PCG and LG Chem will work together to offer various grades and new applications of NBL as well as develop high-value added products through continuous research and development (R&D) and investments," PCG said.

Construction of the plant will begin in 2021 while production is scheduled to start in 2023.

"When completed, the plant will have an annual NBL production capacity of 200,000 tonnes," it said.

PCG managing director and chief executive officer Datuk Sazali Hamzah said the partnership marked a strategic step in developing its specialty chemicals portfolio, underpinning its position as a leading integrated chemicals producer in Malaysia.

Sazali said the partnership also provided a compelling entry point into the growing NBL-based products and enabled PCG to enhance its presence in attractive end-markets, especially for personal care and healthcare, mainly in Asia Pacific.

"This collaboration further strengthens the pursuit of our growth agenda, having acquired a silicone player last year.

"With more specialty chemicals in our portfolio, we are moving into segments with higher growth potential," he said.

NBL is a synthetic rubber that uses butadiene as the main feedstock and is a core raw material for making nitrile gloves, which is widely used in industries such as healthcare, medical, and food, among others.

Recently, the use of nitrile gloves had seen rapid growth in helping to prevent the spread of Covid-19 and other infections.

The rising demand of nitrile gloves is at an annual average of more than 10 per cent and is expected to account for 70 per cent of the entire latex gloves market in 2024.

As MRC wrote before, in early May, 2020, Petronas Chemicals (Kuala Lumpur), Malaysia’s leading petrochemicals player, reported a drop in first-quarter sales and earnings citing the coronavirus disease 2019 (COVID-19) pandemic. The sharp decline in petrochemical product prices following the outbreak of COVID-19, the deepening industry downcycle as crude oil prices collapsed due to the OPEC+ fallout, and the recessionary global economic outlook have hurt results, the company says.

We remind that LG Chem, a South Korean petrochemical major, reduced its operational rates of its cracker to around 90-95% starting January 2020 due to weaker economic fundamentals. Based in Daesan, South Korea, the cracker is able to produce 1.27 million tons/year of ethylene and 650,000 tons/year of propylene. The company increased capacity utilisation at this cracker to 100% on 10 March, 2020, in order to supply ethylene to Lotte Chemical.

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.

Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.
MRC

MOSCOW (MRC) -- Venezuela’s state-run oil company, Petroleos de Venezuela, has restarted gasoline output at the 310,000-barrel-per-day (bpd) Cardon refinery, reported Reuters with reference to five people familiar with the matter.

The move will provide partial relief to widespread fuel shortages in the once-prosperous OPEC nation, whose 1.3 million- bpd refining network is mostly halted because of years of underinvestment and lack of maintenance, as US sanctions restrict the country’s ability to import fuel.

Cardon’s reformer is currently producing some 25,000 bpd of gasoline for the internal market by processing naphtha and raising its octane levels, according to the people, most of whom spoke on condition of anonymity. The reformer had been halted for several months due to a lack of naphtha supply.

The company is still working to restart Cardon’s fluid catalytic cracking (FCC) unit, which is also crucial for gasoline production, one of the people said. That unit was halted in July, just days after restarting.

PDVSA did not immediately respond to a request for comment.

The only other plant producing gasoline in Venezuela is PDVSA’s 146,000-bpd El Palito refinery, whose FCC is producing some 20,000 bpd of gasoline. That is not nearly enough to satisfy domestic demand, leading to sprawling lines outside service stations across the country.

Union leader Ivan Freites told Reuters that the gasoline being produced at Cardon’s reformer had an octane level of 90, whereas most vehicles in Venezuela required gasoline with an octane level of either 91 or 95.

As MRC informed before, Russian state oil company Rosneft's decision to cease operations in Venezuela and sell its assets there to a Russian government-owned company was a "maneuver" made in reaction to collapsing oil prices, a US State Department official said earlier this year.

We remind that Angarsk Polymers Plant, part of Russian oil giant Rosneft, shut down its low density polyethylene (LDPE) production for a scheduled turnaround on 22 June. The outage was scheduled to last for one month. The plant"s annual production capacity is about 75,000 tonnes.

According to MRC's ScanPlast report, June LLDPE shipments to the Russian market rose to 38,600 tonnes from 31,290 tonnes a month earlier, production increased. Russia;s overall LLDPE shipments totalled 191,700 tonnes in the first six months of 2020, down by 7% year on year. Production increased by 89% year on year, whereas exports grew by several times.
MRC

MOSCOW (MRC) -- Four members of a dredging vessel are missing after a fire and explosion near the Port of Corpus Christi, Texas, on Friday, causing the US Coast Guard to close the port’s inner harbor, reported Reuters.

Two injured crew members have been rescued from the dredging vessel Waymon L Boyd after it caught fire, while a search for missing crew members continues, the Coast Guard said.

The fire started shortly after 9:00 AM ET (1300 GMT) in an area referred to as “refinery row” because of its proximity to several refining facilities, according to a spokeswoman for the Corpus Christi fire department.

An investigation into the incident is underway. Authorities have not said what caused the explosion that sent six people to hospital. Local media reported an underwater pipeline was breached and a fiery explosion engulfed the vessel.

Names of the missing crew members have not been disclosed. The Coast Guard said the ship broke apart and sank. The four were working for Orion Marine Group, which was dredging in the Corpus Christi ship channel at the time of the explosion.

“We continue to work alongside the US Coast Guard, the Port of Corpus Christi Authority, TCEQ, and the other agencies to assist in the recovery of our personnel and the wider investigation into this incident,” said Orion Chief Executive Mark Stauffer.

As MRC wrote before, a dredging barge hit a natural gas liquids pipeline of Enerprise Products at the Port of Corpus Christi, Texas early Aug. 21, causing an explosion. "Shortly after 8 a.m. CDT today Enterprise Products Partners ("Enterprise") experienced a release of propane from a portion of its South Texas pipeline system at the Port of Corpus Christi. The incident resulted in a fire and unconfirmed reports of injuries," Enterprise said in a statement. "Initial findings indicate that the pipeline was struck by a third-party dredging barge working in the immediate vicinity, however a full investigation will be conducted to determine the cause." Enterprise "has isolated the affected segment of the pipeline," the company said.

We remind that Enterprise Products Partners LP (EPP), through one of its affiliates, has entered a long-term agreement with Marubeni Corp. of Japan, under which Marubeni will offtake polymer-grade propylene (PGP) produced from a second (PDH 2) plant currently under construction at EPP’s operations in Mont Belvieu, Tex., for supply to global customers. Concluded on June 16, the PGP offtake agreement is part of a long-term collaboration between EPP and Marubeni that also includes the export of liquefied ethylene, the first 25-million lb vessel of which loaded and sailed from EPP and Navigator Holdings Ltd.’s 50-50 joint venture marine terminal at Morgan’s Point, Tex., in early January, EPP and Marubeni said on June 30.

We also remind that in July, 2020, Enterprise Products conducted maintenance at its propane dehydrogenation (PDH) unit in Mont Belvieu, Texas. This PDH unit has the capacity of 750,000 mt/y of propylene.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's DataScope report, 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