Oil refineries shut as Texas energy industry reels from deep freeze

MOSCOW (MRC) -- A deep freeze across Texas took a toll on the energy industry in the largest US crude-producing state, shutting oil refineries and forcing restrictions from natural gas pipeline operators, reported Reuters.

The cold snap prompted the state’s electric grid operator to impose rotating blackouts, while President Joe Biden declared an emergency on Monday, unlocking federal assistance to Texas.

Texas produces roughly 4.6 MMbpd of oil and is home to some of the nation’s largest refineries, spread throughout the Gulf Coast. In Midland, heart of the US Permian shale region, temperatures were in the single digits Fahrenheit.

Motiva Enterprises said it was shutting down its Port Arthur, Texas complex, which includes its 607,000-bpd refinery, the largest in the United States.

Exxon also began shutting its 369,024-bpd Beaumont, Texas refinery, while its Baton Rouge facility in Louisiana experienced operational issues.

Citgo Petroleum Corp. said some units at its 167,500-bpd Corpus Christi, Texas refinery were being shut. Sources familiar with plant operations said earlier that the crude distillation unit, a reformer and a hydrotreater were shut by cold weather at the refinery, with all other units also being powered down.

The cold snap also forced Lyondell Basell’s 263,776-bpd Houston refinery to operate at minimum production and shut most units at Marathon’s 585,000-bpd Galveston Bay plant.

“We are also getting reports of power outages across the Permian, which are expected to continue if the current weather system persists. This may result in intermittent production shut-ins, with a moderate impact on Permian oil production expected in February,” Rystad Energy’s head of oil markets, Bjornar Tonhaugen said, in a note.

Energy distribution was stalled across large parts of the United States.

Kinder Morgan’s Natural Gas Pipeline Co. reported capacity constraints at various locations on its pipeline system, while Enable Gas Transmission said it was taking measures to ensure adequate supply for customers.

Oil pipeline operator Enbridge on Monday said a 585,000-bpd crude oil pipeline that runs from its terminal near Pontiac, Illinois, outside of Chicago, to the largest U.S. oil storage hub in Cushing, Oklahoma, was halted because of power outages. “Crews are working with electric utility providers to restore power to Line 59,” (as the pipeline is called), said Enbridge spokesman Michael Barnes. “The power failure is due to the winter storm the US is experiencing.”

The icy weather conditions also prompted Port Houston public terminals to cease vessel operations from Sunday evening through Monday.

As MRC informed earlier, last year, Exxon Mobil Corp announced it will lay off about 1,900 employees in the United States as the COVID-19 pandemic batters energy demand and prices.

We remind that ExxonMobil has undertaken a planned shutdown at its cracker in Singapore. The company halted operations at the cracker for maintenance on September 14, 2020. The cracker was expected to remain off-line till end-October, 2020. Located at Jurong Island, Singapore, the cracker has an ethylene production capacity of 1 million mt/year and a propylene production capacity of 450,000 mt/year.

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). Supply of exclusively PP random copolymer increased.
MRC

Former Versalis CEO joins SK Capital

MOSCOW (MRC) -- Daniele Ferrari, former CEO of Italian chemicals maker Versalis, will join private equity from SK Capital Partners (New York, New York) as a senior director, according to Chemweek with reference to the firm's statement.

Ferrari was CEO of Versalis, a subsidiary of energy giant Eni, for nine years. Ferrari also served as chairman of Matrica, a bioplastics joint venture between Novamont and Versalis, during that time.

Ferrari has held other executive roles at Eni and Huntsman during a 35-year career, and has served as a leader in industry trade associations in Europe.

As MRC reported previously, SK Innovation Co Ltd, the owner of South Korea's top refiner SK Energy, said in early February, 2021, that refining margins are expected to gradually recover this year on a pick-up in fuel demand as the impact of COVID-19 eases. The company, which has been battered by weak margins during the global pandemic, posted an operating loss of 243 billion won (USD218 million) in the October-December quarter.

We remind that SK Advanced is planning to start up the new polypropylene (PP) plant in Ulsan, South Korea this March 2021 as construction works are nearly completed. The PP unit is a joint venture between PolyMirae and SK Advanced, using the “Spheripol” process of LyondellBasell, and have an annual output of 400,000 tons/year. The unit will be utilizing the propylene output from SK’s 600,000 tons/year propane dehydrogenation (PDH) unit at the same complex. It is expected that SK Advanced would have a smaller propylene allocation for export once the new PP line comes online.

According to MRC's ScanPlast report, 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). Supply of exclusively PP random copolymer increased.
MRC

Shell shuts down refinery and chemical plant in Deer Park

MOSCOW (MRC) -- Shell has shut down the crude distillation units of its Deer Park refinery due to a malfunction, Reuters has reported, reported Reuters citing unnamed sources familiar with the matter.

The two crude distillation units have a combined capacity of 310,000 barrels of oil daily. According to the Reuters sources, they were shut down after a seal failed on a pump that feeds crude to other units at the refinery.

Crude distillation units are where the first phase of the refining process takes place. In it, crude oil is fed into the refinery, where it is distilled into the various fractions that are then sent on to other units at the refinery for further processing.

Therefore, shutting down the crude distillation units effectively means shutting down most of the refinery.

Shell recently revealed plans to reduce its refining capacity by shutting down seven refineries and cutting diesel and gasoline production by 55 percent over the next ten years as part of its journey to a net-zero company by 2050.

One of the refineries to be closed is the facility in Convent, Louisiana. Its shutdown started at the end of 2020 after Shell failed to find a buyer for the facility amid the slump in oil and fuel demand caused by the pandemic and excess supply of crude. The Convent facility had a capacity of 240,000 barrels of crude oil daily and was capable of producing 115,000 bpd of gasoline, 31,000 bpd of jet fuel, and 77,000 bpd of low-sulfur diesel.

Shell is not the only one closing refineries in the United States. Other processing facilities are being converted into biofuels plants or mothballed under pressure from market conditions. Fuel demand has not been improving from the pandemic blow as fast as refiners need it to improve, and the green transition movement is clouding the outlook for long-term demand for fuels, forcing refiners to adjust their plans.

As MRC wrote before, earlier this month Shell said it will invest between USD4-5 billion annually to grow its chemicals and products business as part of a wider rebalancing of its group portfolio to reach its net-zero carbon emissions goal by 2050.

We remind that Royal Dutch Shell has reported an outage at its olefins plant in Deer Park, Texas, USA, on 5 January, 2021. The plant flared for 16 hours following unspecified process upset. Maximum steam cracker operating rate in Texas falls to 89%.

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). Supply of exclusively PP random copolymer increased.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

Sluggish demand hurts PTTGC full-year earnings

MOSCOW (MRC) -- PTT Global Chemical's (PTTGC) fourth-quarter net profit surged to Thai baht (Bt) 6.41bn from the same period last year on the back of higher product prices, with sales up 3% year on year, said Chemweek.

Its full-year 2020 results, however, reflected a general weakness in demand caused by the coronavirus pandemic, with a 20% decline in sales nearly wiping out its profit. The company's EBITDA margin rose to 12% in the fourth quarter of 2020 from 5% in the same period of 2019, supported by strong margins at the olefins and derivatives business.

Its olefins and derivatives business for the period posted an adjusted EBITDA margin of 23%, more than double 10% registered in the same period a year earlier. PTTGC's average polyethylene (PE) prices in the last three months of 2020 were up 22% year on year at USD1,074/tonne.

For the full year of 2020, PTTGC's net profit shrank to Bt200m as average product prices slumped due to poor demand amid the coronavirus pandemic. The PX market was under pressure from weaker demand from downstream purified terephthalic acid (PTA) and polyester markets, it said. Some demand support was provided by downstream polyethylene terephthalate (PET), mainly for food packaging and single-use bottles.

As per MRC, PTT Global Chemical has put plans for the construction of a massive petrochemical plant in eastern Ohio on hold while it conducts another feasibility study. The proposed project, which was announced in 2015, has faced a series of delays.

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.

PTT Global Chemical is a leading player in the petrochemical industry and owns several petrochemical facilities with a combined capacity of 8.45 million tonnes a year.
MRC

CVR Energy plans potential renewable diesel project at Coffeyville

MOSCOW (MRC) -- CVR Energy Inc plans to pursue a renewable diesel project at its 132,000 bpd Coffeyville, Kansas, refinery if it succeeds in producing the fuel at its Wynnewood, Oklahoma, plant, reported Reuters with reference to the refiner's statement.

CVR said it has excess hydrogen capacity and a high-pressure hydrotreater at Coffeyville that could be repurposed for renewable diesel production, pending approvals.

CVR is converting a hydrocracker at Wynnewood to allow for the production of renewable diesel, which could receive feedstock as early as May 2021, and begin processing by the following July, the company said.

Crude processing at the plant will decrease from 75,000 bpd to between 55,000 and 59,000 bpd.

“If market conditions change materially, then we would have the option to return the unit to hydrocarbon service fairly easily at minimum cost,” CVR Chief Executive David Lamp said on an earnings call with investors.

If refining margins remain weak, the refiner plans to install a pretreatment unit at Wynnewood to process lower carbon-intensity feedstocks like inedible corn oil, animal fats and used cooking oil.

As MRC informed previously, earlier this month, KBR, Inc. announced that a subsidiary of CVR Energy, Inc. ("CVR Energy") is proceeding with the next phase of the KBR Solid Acid Alkylation Technology (K-SAATTM) project for its refinery in Wynnewood, Oklahoma. CVR Energy previously awarded a contract to KBR to provide the basic engineering design based on K-SAAT technology to revamp its existing HF alkylation unit at its Wynnewood refinery. CVR Energy now plans to take the project to the next phase, which would entail KBR providing detailed engineering of the process equipment, proprietary equipment supply and module fabrication. The expected mechanical completion of the project would be late 2024, subject to regulatory and internal approvals.

We remind that in September 2020, Ningxia Baofeng Energy Group Co. (Baofeng Energy) selected KBR's proprietary cracker technology for its new methanol-to-olefins (MTO) project to be built in Ningxia, China. Under the contracts, KBR will provide process technology licensing and process design packages for Baofeng Energy's 500,000-t/y coal-to-olefins facility and its 500,000-t/y C2-C5 comprehensive utilization project. Once complete, the complex will be the "largest" single-train MTO plant in the world, KBR noted.

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). Supply of exclusively PP random copolymer increased.
MRC