Crude oil futures increase in Asia on supply disruptions in the US Gulf Coast following Hurricane Ida

Crude oil futures increase in Asia on supply disruptions in the US Gulf Coast following Hurricane Ida

MOSCOW (MRC) -- Crude oil futures were higher in midmorning Asia trade Sept. 10 with the outlook tightened by supply disruptions in the US Gulf Coast following Hurricane Ida, reported S&P Global.

At 11:15 am Singapore time (0315 GMT), ICE November Brent futures was 29 cents/b (0.41%) higher at USD71.74/b while the NYMEX October WTI contract was up 22 cents/b (0.32%) at USD68.36/b.

"The impact from Hurricane Ida will continue to linger for some time," ING research analysts said Sept 10, adding that total crude oil production losses as a result of the storm now amount to slightly more than 22 million barrels, and with output still struggling to recover, this would grow.

Loading disruptions and supply issues due to Hurricane Ida have likely contributed to the week-on-week decrease in supply, with a few terminals, including Louisiana's Offshore Oil Port, shut following the storm.

As of Sept. 9, 1.392 million b/d, or 76.5%, of US Gulf of Mexico crude oil production remained offline, according to the US Bureau of Safety and Environmental Enforcement

Despite the uptick in prices, uncertainties loomed as the market came under renewed pressure. China announcement Sept. 9 that it will release a part of its state oil reserves through public auction to offer domestic refiners relief from high feedstock costs.

Throughputs at China's independent refineries in eastern Shandong province have continued to fall in August due to maintenance works and cuts earlier in the month amid weak margins, according to S&P Global calculations based on data from JLC. The combined throughput comprising crude, bitumen blend and fuel oil fell to a 17-month low of 9.45 million mt in August, according to JLC data Sept. 9.

In inventory news, the total US commercial crude stocks declined 1.53 million barrels in the week ended Sept. 3 to 423.87 million barrels, according to the Energy Information Administration on Sept. 9, leaving them around 6% behind normal for this time of the year. Total motor gasoline inventories decreased 7.2 million barrels last week and are about 4% below the five-year average for this time of the year.

The EIA in its September Short-Term Energy Outlook released Sept. 8 have also said that growing concerns about the spread of the delta variant have fostered continued declines in oil prices. Sharing a similar sentiment, ANZ analysts said demand in the aviation sector looked bearish with US airlines warning of slowing growth. United, Southwest and other airlines have said that a surge in COVID-19 cases is likely to hamper their recovery, with customer bookings slowing recently.

As informed earlier, Shell said it observed damage from Hurricane Ida to its transfer station West Delta-143 offshore facilities in the Gulf of Mexico. West Delta-143 serves as the transfer station for all production from its assets in the Mars corridor in the Mississippi Canyon area of the Gulf of Mexico to onshore crude terminals. Shell said it is not yet safe to send personnel offshore to learn the full extent of the damage and estimate the effect on production.

We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.

We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC

Fire breaks out at Toronto chemical plant

Fire breaks out at Toronto chemical plant

MOSCOW (MRC) -- An investigation has begun into the cause of a fire that killed one person and left another with life-threatening injuries at a Toronto chemical plant on Wednesday morning, reported CBC News.

Emergency crews were called to the plant near Beth Nealson Drive and Wicksteed Avenue in the Thorncliffe Park area just after 9:50 a.m. Toronto police originally said they were called to attend to an explosion, but Toronto Fire later clarified that the incident was a chemical fire.

"Toronto Fire Service has extinguished the fire," said Acting Fire Chief Jim Jessop at a news conference on Wednesday. "As of right now there is no risk to the public ... we are now just making sure the chemicals involved in this process have been stabilized."

Officials said the incident was caused by a chemical spill, but Jessop would not confirm which specific chemicals were involved.

"Without question our crews were met with a significant chemical fire that took us a while to extinguish," he said.

Fire officials said the incident occurred at a site of specialty chemicals firm Siltech Corp in eastern Toronto. The plant has been evacuated and the roads and railway are closed in the area.

Police also said the fire has been classified as an industrial accident, which will be investigated by the Ministry of Labour.

As MRC wrote previously, a major incident occurred at Irving Oil’s Saint John refinery in New Brunswick in early October, 2018. Residents in the area reported an explosion and fire at the refinery. Irving Oil Corp shut its Saint John refinery in the Canadian province of New Brunswick after an explosion and a major fire that followed. The company operates the 320,000 barrel-per-day refinery at this site.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.
MRC

Datang Duolun shuts PP plant in China on coal consumption control

Datang Duolun shuts PP plant in China on coal consumption control

MOSCOW (MRC) -- Datang Duolun Coal Chemical Corporation has shut its coal-based polypropylene (PP) plant in Inner Mongolia on 6 September, 2021, following an order from the regional government as part of the “Dual Control” of energy consumption and energy intensity, according to CommoPlast.

The 460,000 tons/year PP plant is expected to remain offline until 30 September 2021.

In a statement on its official gazette, the Inner Mongolia regional government said that for the first seven months of 2021, the region’s coal consumption hit 6.7 million tons, representing a 2% growth rate year-on-year, which exceeded the target of 1.5% growth rate. High energy consumption companies within the region are ordered to temporarily shut down as not to affect the year-end target.

Coal supply in local China has been persistently tight over the past months due to high demand and transportation bottlenecks. The central government has been rallied top miners to ramp up supplies. According to a report from Reuters citing local media, in August 2021, coal inventories held by miners fell 26% year-on-year to historic lows.

As MRC reported earlier, Datang Duolun took off-stream its two PP units on July 28, 2020, for a turnaround, which laste until September 10, 2020. Located at Duolun in Inner Mongolia, the two PP units have a production capacity of 230,000 mt/year each.

According to MRC's ScanPlast report, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

Datang International Power Generation Co., Ltd. is a power generation company. The principal activities of the Company are power generation and power plant development in the People's Republic of China (PRC). It is also engaged in activities, including the sale of electricity and thermal power, repair and testing of power equipment, power related technical services, coal trading, chemical products manufacturing and selling, coal chemistry, transportation and recycling.
MRC

Uz-Kor Gas Chemical shut down PE and PP production for a scheduled maintenance works

MOSCOW (MRC) -- The joint venture Uz-Kor Gas Chemical, established by the National Holding Company Uzbekneftegaz and the investment consortium of Korean companies - Kogaz, Lotte Group and STX Energy, shut its production of polymers for the turnaround, according to ICIS-MRC Price Report, with reference to the plant's customers.

The plant's clients said Uz-Kor Gas Chemical began the scheduled maintenance at its high density polyethylene (HDPE) and polypropylene (PP) production capacities on 6 September. The outage will be quite long and will last for about three weeks.

As MRC reported earlier, Uz-Kor Gas Chemical was built on the basis of Ustyurt Gas Chemical Comples (Surgil deposit).

The total cost of the project is over USD4 billion. The complex provides processing of 4.5 billion cubic meters of natural gas and includes HDPE and PP production facilities with the annual capacity of 386,000 and 80,000 tonnes, respectively.
MRC

Shell declared force majeure on some oil deliveries due to damage from Hurricane Ida

Shell declared force majeure on some oil deliveries due to damage from Hurricane Ida

MOSCOW (MRC) -- Royal Dutch Shell Plc, one of the largest operators in the Gulf of Mexico, declared force majeure on some oil deliveries due to damage from Hurricane Ida, which has crippled U.S. offshore oil production, said Reuters.

More than three-quarters of the U.S. Gulf of Mexico's offshore oil output remained shut following Ida. Crude buyers said the full restart of production remained unclear due to extensive damage to various facilities. The hurricane was one of the most devastating for offshore producers since back-to-back storms in 2005 cut output for months.

Shell has a majority stake in the Mars offshore field in the Gulf of Mexico, where it was still assessing damage that has kept production offline for nearly two weeks. "Crews are working to complete a comprehensive assessment of the damage and to the degree possible, assess how long production from our Mars corridor assets will be impacted," company spokesperson Curtis Smith said in a statement.

Force majeure is a legal provision used by companies during unforeseen events such as hurricanes when they cannot meet contractual obligations. Shell is one of the largest U.S. Gulf producers, with output of approximately 150 million barrels of oil equivalent per year. U.S. offshore crude production totaled more than 600 million barrels in 2020, according to U.S. Energy Department figures.

Asian buyers including China and South Korea have stepped up purchases of Gulf-produced crude in recent months, and now face lengthy delays before shipments arrive as oil companies assess damage from Ida. China's Unipec, the trading arm of Asia's top oil refiner Sinopec, is expecting late September and early October deliveries of Mars crude, the Gulf sour benchmark, to be disrupted, trade sources said.

The Louisiana Offshore Oil Port, the largest deepwater export terminal for loading crude oil, also remained offline as of Thursday. U.S. oil exports sank in the most recent week, falling to 2.3 million barrels per day, a fall of 700,000 bpd, as a result of the shut ins.

Shell has started to send personnel to its Appomattox platform in the gulf while damage assessments are continuing at its West Delta-143 (WD-143) offshore facilities. Those facilities serve as the transfer station for all production from Shell's assets in the Mars corridor in the Gulf of Mexico to onshore crude and natural gas terminals.

As MRC informed previously, Royal Dutch Shell plc. said in November that its petrochemical complex of several billion dollars in Western Pennsylvania is about 70% complete and in the process to enter service in the early 2020s. The plant's costs are estimated to be USD6-USD10 billion, where ethane will be transformed into plastic feedstock. The facility is equipped to produce 1.5 million metric tons per year (mmty) of ethylene and 1.6 mmty of polyethylene (PE), two important constituents of plastics.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

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