Category Archives: Refineries

Largest Houston-Area Downstream: Refineries – Houston Business Journal

Ranked by Oil Barrels Capacity per Calendar Day

Source: Largest Houston-Area Downstream: Refineries – Houston Business Journal

MarkWest Deal is Bullish for Natural Gas Liquids and EPD -Barrons

Following Monday’s announcement that MarkWest Energy Partners (MWE) is being purchased by MPLX (MPLX), other midstream MLPs rallied.

SunTrust Robinson Humphrey analyst Tristan Richardson writes in his afternoon report on the deal:

We see the transaction as a validation of the long term demand for US NGL infrastructure. As the NGL barrel has declined, G&P firms and firms with exposure to liquids have seen valuations compress. Pro forma MPLX will be a significant handler of NGLs in the US and we think speaks to long term potential for midstream development around NGLs, despite current depressed prices.

Several Northeast players gained on the deal announcement, including Genesis Energy (GEL), up 4%, DCP Midstream Partners (DPM), up 3% and Targa Resources Partners (NGLS), up 2.5%.

Richardson believes the deal is particularly bullish for Enterprise Products Partners (EPD), which didn’t benefit on Monday. He writes:

EPD has pulled back amid concerns of NGL prices and the ability to grow in a difficult environment. The proposed deal speaks to the long term potential for the NGL market and the buildout of NGL infrastructure to new sources of market demand including NE export, Gulf export, Midwest refining and Canada, where EPD remains a leader with significant organic growth opportunities.

Richardson has a Buy rating on EPD and listed it among his favorite midstream MLP stocks in a mid-June report.

via MarkWest Deal is Bullish for Natural Gas Liquids and EPD – Income Investing – Barrons.com.

America’s largest new refinery since 1977 may be built in South Texas (Eagle Ford)

A Houston company is looking to pump $500 million into South Texas to create the largest new refinery in the U.S. in nearly 40 years.The facility — located in the southwest corner of Duval County off of Texas Highway 359 — will be able to process up to 50,000 barrels of Eagle Ford shale light crude oil a day, and will have up to 4 million barrels of available storage, the company said in a news release.

Source: South Texas to get America’s largest new refinery since ‘77 – San Antonio Express-News

Marathon Petroleum profit misses on lower margins | Reuters

Marathon Petroleum Corp (MPC.N) reported a smaller-than-expected quarterly profit as lower margins and realized prices continued to hurt its earnings.The company, whose operations are concentrated primarily in the Midwest, Southeast, and Gulf Coast regions of the U.S., said its refining and marketing gross margin fell nearly 38 percent to $10.75 per barrel.Refiners have seen their margins shrink due to the narrowing price difference between U.S. Crude CLc1 and globally traded Brent futures LCOc1, to which the price of refined products are tied.”Despite a challenging quarter, we remain optimistic as we move forward into 2017, given the signs of market rebalancing and sustained strong demand,” Chief Executive Gary Heminger said.On an adjusted basis, quarterly profit was 58 cents per share, much below the analysts’ average estimate of 81 cents per share, according to Thomson Reuters I/B/E/S.The company also said it plans to dropdown certain assets to its midstream master limited partnership MPLX.

Source: Marathon Petroleum profit misses on lower margins | Reuters

Fire at LyondellBasell refinery in Houston: sources | Reuters

A fire ignited Friday morning at LyondellBasell Industries’ 263,776 barrels-per-day refinery in Houston, sources at the plant told Reuters.Details were unavailable, though a huge plume of smoke blanketed east Houston. On Thursday a hydrogen compressor malfunction shut a gas oil hydrotreater at the plant.

Source: Fire at LyondellBasell refinery in Houston: sources | Reuters

Saudis expand price war downstream

The undisputed king of oil and gas is making some moves that could change the face of the global refining sector. In June 2015, Saudi Arabia pumped a record 10.564 million barrels a day, a record level. As if being the world’s biggest exporter of oil was not enough, the desert kingdom is now looking to conquer the refining sector as it has quickly become the fourth largest refiner in the world. “Saudis have moved into the product business in a big way,” said Fereidun Fesharaki of FGE Energy. With Saudi Arabia’s refined fuel contributing to the global supply glut, what will be its impact on the refining markets especially those in Asia?

via Saudis expand price war downstream.

Refiners lead major US energy stocks in shale era | Hydrocarbon Processing | July 2015

Marathon Petroleum’s $15.8 billion deal to expand its rapidly-growing pipeline network highlights one of the most surprising developments in the shale era: after being written off a few years ago, refiners are printing money.

Since June 2011, when Marathon Oil spun off what some thought would be low-margin refining and pipeline units, the top four energy performers on the Standard & Poor’s 500 Index were fuel processors Tesoro Valero Energy, Marathon and Phillips 66. Tesoro more than quadrupled.

Read that again: the best energy stocks in the last four years were the assets that many thought were either doomed or not worth owning as a US energy renaissance took hold.

The producers that drove the shale revolution have suffered as crude prices fell by more than half in the worst oil crash in a generation.

Why? The main reason is that refiners have access to cheaper crude. The tremendous amount of new oil produced in shale regions is essentially landlocked, because most US exports are banned. That means refiners pay less in the US than competitors in other regions.

Another key reason is that refiners have invested billions to build, expand and update their pipelines and logistics businesses, as Marathon did Monday. Along with Marathon, Tesoro, Valero and Phillips 66 have all created or expanded their pipeline units, helping minimize the inherit volatility in the refining business.

via Refiners lead major US energy stocks in shale era | Hydrocarbon Processing | July 2015.

Energy Companies to Merge in $15.8 Billion Deal – NASDAQ.com

A partnership controlled by Marathon Petroleum Corp., a refinery and pipeline company, will buy MarkWest Energy Partners LP for $15.8 billion in one of the biggest oil-patch deals since crude prices began to slump last summer.

The deal will marry Marathon’s oil pipeline network with MarkWest’s business separating natural gas into fuels such as propane and ethane.

The combined company would have a market capitalization of $21 billion, making it the fourth-largest master limited partnership. These partnerships, which typically own infrastructure like pipelines that earn steady revenue from long- term contracts, have fared better than traditional drilling companies during the energy downturn but still have faced headwinds.

Shares of MPLX closed 15% lower to $59, while shares of MarkWest rose nearly 14% to $68. Shares of Marathon Petroleum Corp. rose 7.9%.

The deal is the latest consolidation between energy partnerships, which don’t pay corporate income taxes but distribute their available cash to shareholders. The need to keep these hefty payouts growing means the partnerships are always looking to expand.

Gary R. Heminger, Marathon’s chief executive, said the deal would allow the partnership to boost its annual distribution by 25% through 2017.

“The combination significantly increases our size, scale and the opportunity to grow over a very long period of time,” Mr. Heminger told analysts during a conference call on Monday.

Refiners have been among the newest energy companies to form these partnerships. Marathon Petroleum, of Findlay, Ohio, owns refineries in Texas, Louisiana, and throughout the Midwest. It launched MPLX in 2012 to own and operate pipelines and other fuel transportation assets.

But recently, refiner-backed partnerships have started to branch out beyond their parent companies—and beyond oil. Last year, a partnership controlled by Tesoro Corp., the refiner based in San Antonio, bought a natural gas gathering and processing company for $2.5 billion.

Executives from Marathon and MarkWest said Monday that they began to explore the idea of combining after the two companies worked together on projects in the Northeast, where fuels known as natural gas liquids are commonly produced along with gas in the shale fields of Ohio and Pennsylvania.

The combination illustrates that region’s allure, even as a glut of oil and gas has sent prices for these fuels plummeting in recent months and sparked concern that production could slow down. MarkWest is one of the largest natural- gas processors in the U.S., with a particularly large presence in the Northeast.

As oil prices continue to languish, diversifying into other fuels like natural gas and liquids including propane and ethane becomes more attractive, said Brandon Blossman, a managing director at Tudor Pickering Holt & Co., an energy investment bank based in Houston.

“Low oil prices and the implication that oil volume growth slows or stops has put pressure on the oil-focused midstream players think about diversification towards gas,” he said.

via Energy Companies to Merge in $15.8 Billion Deal – NASDAQ.com.

U.S. merchant refiners take oil trading back in-house

NEW YORK, Oct 9 – Independent U.S. refiners are taking back control of their crude supplies just a few years after outsourcing trading to Wall Street banks and bigger companies, hoping to capture more profit from a global market in flux.After the financial crisis of 2007-2009, a number of ailing U.S. refineries were sold to investors such as Carlyle Group and Delta Air Lines Inc, which lacked the credit agreements or oil trading expertise to efficiently supply their new plants. So they struck deals with the likes of Morgan Stanley and BP to find and purchase crude on their behalf.But the unexpected U.S. shale oil boom has upended the industry, leaving refiners looking inward for crude from places such as North Dakota and Wyoming instead of scouting for barrels in Africa or Europe. It has also caused dramatic flux in domestic prices and a vast expansion of infrastructure, opening up opportunities for nimble traders.So now, many independent refiners are taking their trading arrangements in-house, shedding old deals, hiring new traders and adding new competition for the middlemen and logistics firms that have profited from the shale boom.On Tuesday, Philadelphia Energy Solutions LLC, the biggest refinery on the East Coast, became the latest to join the trend, severing a two-year-old supply and logistics agreement with JPMorgan Chase & Co in favor of a pure inventory and capital finance arrangement with Bank of America Corp.The switch was initially triggered by JPMorgan’s decision to quit physical trading, making it the latest bank to bow out of commodity markets amid regulatory pressure. That trend is another reason refiners are looking to trade for themselves.But PES, which is backed by Carlyle, was also seeking greater flexibility in its trading and logistics operations, as well as a financial partner that would not compete with it in markets, according to a source. With the deal, PES will take control of its own logistics, previously handled by JPMorgan.“These refiners are seeing a lot of profit for the middle man, and they are saying to themselves ‘why shouldn’t we capture that profit,’” said Houston University professor Edward Hirs, an expert in energy finance.“So, they are hiring bright people, with MBAs and experience, to do it.”Others have already done so.This past summer, PBF Energy – run by Thomas O’Malley, a legendary refinery investor who once ran energy trader Phibro – ended the last part of a deal with Morgan Stanley.Even Delta Air Lines’ Monroe Energy division, which runs a refinery in Trainer, Pennsylvania, has sought to improve its supply options, scotching a supply deal with BP and chartering its own U.S.-flagged tanker. It also hired Hugo Zagaria, a senior trader at Plains All American for the past decade, to run its refinery supply operations.

via U.S. merchant refiners take oil trading back in-house | eaglefordtexas.com.

Quantum Energy partners to develop multiple refineries in the Bakken

Quantum Energy Inc. has entered into a strategic alliance with Bilfinger Westcon Inc. to build multiple diesel refineries throughout the Bakken region. The facilities will also include a natural gas liquids stripping capacity of 100,000 barrels per day.“This Strategic Alliance was created by the signing of a joint development agreement that will see to develop up to five 21st Century clean energy centers that will each include a 20,000 barrel per day diesel refinery,” said Andrew Kacic, Quantum CEO. “Our design plan includes the latest clean technology to capture the CO2 released from our facilities for use in Enhanced Oil Recovery EOR throughout the Bakken. We welcome Bilfinger Westcon’s decision to join us as Bilfinger Westcon has been a key part of the development of the first greenfield refinery in the U.S. since 1976.”According to Dennis Chismar, Bilfinger Westcon VP of business development, the initial phase of this development will involve studies to support site evaluations, site selections, environmental permitting plans and refinery market studies.Construction will begin soon after the capital is raised.“There’s a lot of interest,” said Russell Smith, executive vice president of public affairs for Quantum Energy. “The ROI on these types of projects are very attractive to the market and they’re pretty far down the road with a number of potential capital sources.”

via The Bakken magazine – Quantum Energy partners to develop refineries in the Bakken.