TotalEnergies Sees Bonanza in Refining Margins, Adds Output in Europe

Researched by Industrial Info Resources (Sugar Land, Texas)--TotalEnergies SE (NYSE:TTE) (Courbevoie, France) expects to ride a wave of high margins for refined petroleum products, such as distillates and gasoline. Executives are preparing to announce "exceptional" second-quarter results for the company's refining and chemicals operations, notably in its European business, which is seeing some of the tightest conditions in the global refining sector. The results could bode well for other refiners, who also are set to benefit from the high-demand, low-supply forecast. Industrial Info is tracking about US$79 billion worth of active projects from TotalEnergies, including US$1.72 billion worth in the Petroleum Refining Industry.

Click on the image at right for a graph detailing TotalEnergies' active global projects, by industry.

For its European refining business alone, TotalEnergies' variable cost margin averaged US$145.70 per ton in the second quarter of 2022, compared with US$46.30 per ton in first-quarter 2022 and US$10.20 per ton in the second quarter of 2021. At its 230,000-barrel-per-day (BBL/d) Donges Refinery in Pays de la Loire, France, the company is at work on a series of upgrades and unit additions that kicked off long before Russia's invasion of Ukraine, but will be crucial to addressing the soaring demand across the continent:

• A new gas-oil hydrodesulfurization unit to meet European Union (EU) specifications for low-sulfur fuels; see project report
• A new hydrogen unit to meet similar EU specifications; see project report
• Offsite and utility additions to support the new gas-oil hydrodesulfurization and hydrogen units; see project report
• Railway infrastructure modifications, including four kilometers of new tracks; see project report
• A series of environmental upgrades, including features that would reduce on-going sulfur dioxide emissions by 30%; see project report

Click on the image at right for a graph detailing TotalEnergies' active refining projects, by country.

At TotalEnergies' 190,000-BBL/d refinery complex in Port Arthur, Texas, which has been beset in recent weeks by power failures and supply constraints, the company is considering a pair of improvement projects that could begin early in 2023: the debottlenecking of a light naphtha unit and upgrades to a fluid catalytic cracker unit (FCCU). Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Project Database can read detailed reports on the light naphtha and FCCU projects.

Globally, TotalEnergies' second-quarter results in its refining and chemicals businesses are "expected to be exceptional," given the ongoing strength of distillate and gasoline crack spreads. The company is commissioning the US$1.8 billion addition of an ethane cracker at its Port Arthur complex, which will produce 1 million tons per year of ethylene. The project is a result of the 50:50 Bayport-Polymers joint venture between TotalEnergies and Novealis Holdings LLC, which itself is a joint venture between NOVA Chemicals (Calgary, Alberta) and Borealis AG (Vienna, Austria). Subscribers to Industrial Info's GMI Chemical Processing Project Database can read more in a detailed project report.

TotalEnergies had less positive news for its upstream production business, where security-related disruptions in Nigeria and Libya, as well as a higher volume of planned maintenance, are expected to reduce overall production volumes by an average of 100,000 barrels of oil equivalent per day. Nonetheless, TotalEnergies is making strides on one of its most important efforts in Europe: the Tyra II project in the Danish North Sea, which is expected to supply about 60,000 barrels of oil equivalent per day, or 200 million barrels over the next 25 years. Earlier this spring, TotalEnergies announced seven out of eight platforms for Tyra II are now in their final position.

Norwegian Energy Company ASA (Noreco) (Oslo, Norway), a partner in the project, concurrently announced the successful offshore lift and installation for three wellhead and riser platforms, an accommodation module and two bridges. TotalEnergies and its partners continue to construct other major portions of the project, including the Tyra A and Tyra B platform topsides, which will be able to exploit up to 1.5 billion cubic meters of recoverable natural gas.

Industrial Info is tracking US$1.4 billion worth of projects in Tyra II. Subscribers to Industrial Info's GMI Oil & Gas Production Project Database can read detailed reports on the Tyra A and Tyra B projects, and click here for a full list of project reports related to the Tyra II development.

Executives at TotalEnergies also expect the company's natural gas, liquefied natural gas (LNG) and power-trading activities to remain high in the second quarter, albeit somewhat lower than the unusually strong contribution in the first quarter of 2022.

Subscribers to Industrial Info's GMI Project Database can click here for a full list of detailed reports for projects mentioned in this article, and click here for a full list of related plant profiles.

Subscribers also can click here for a full list of TotalEnergies projects in Industrial Info's GMI Project Database.

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