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Released August 12, 2020 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Marathon Petroleum Corporation (NYSE:MPC) (Findlay, Ohio) is mulling changes in its asset portfolio after it idled two of its refineries indefinitely. One of those facilities could see new life as a producer of renewable diesel.
Marathon said last week it would indefinitely idle its 167,000-barrel-per-day (BBL/d) Martinez refinery in California and its 26,000-BBL/d Gallup refinery in New Mexico. Both facilities have been idled since April due to the COVID-19 pandemic and low fuel demand.
Industrial info is tracking more than $3 billion worth of project activity by Marathon, with the lion's share of that investment ($2 billion) in Texas.
Marathon last week reported $9 million in net income for the just-ended quarter, a sharp fall from $1.1 billion for the same quarter of 2019.
"We began April with demand at historic lows," Chief Executive Officer Mike Hennigan said in a press release. "Despite seeing some recovery during the quarter, demand for our products and services continues to be significantly depressed, particularly across the West Coast and Midwest."
"Closures as a result of the tough refining business climate ahead of us have been amplified by the impact of the pandemic," Hennigan said. However, the company is evaluating the revival of the Martinez refinery to produce up to 48,000 BBL/d of renewable diesel.
"We have the unique opportunity to take advantage of the strong set of logistics assets for the area and also have three significant processing units that are an ideal fit for making renewable diesel," Hennigan said during the company's August 3 earnings conference call.
"These advantages should drive significantly lower capital requirements compared to greenfield investments, and if pursued, enable initial production as early as 2022 with the option to ramp up from there," Hennigan said, adding that "the renewable positioning is going to be beneficial to us because it aligns with California's low carbon fuel standards."
The capital expenditures for the first phase of the repurposing of the refinery "is about the same amount of capital that we would put into a planned turnaround for the facility," he said.
Marathon had also looked at selling its Gallup refinery, but "we did not get something we could execute on," Hennigan said.
Going forward, Hennigan said he was confident the company would meet its $950 million expense reduction target for 2020, and was on track to lower capital spending by $1.4 billion for the year. For more information, see May 6, 2020, article - Marathon Petroleum Reduces 2020 Capex in Wake of $9.2 Billion First-Quarter Loss.
Looking to the third quarter, Chief Financial Officer Don Templin said planned turnaround costs are projected to be $270 million, which includes hydrocracker turnarounds at its Los Angeles facility in California, a full plant turnaround in Kenai, Alaska, and catalyst changes at its Galveston Bay, Texas, and Garyville, Louisiana, operations.
The company also expects to complete construction of a 12,000-BBL/d renewable diesel facility in Dickinson, North Dakota, and achieve startup and production by the end of this year. For more information, see Industrial Info's project report.
At Marathon's Galveston Bay Refinery in Texas City, Texas, work continues on a crude unit expansion that will add 40,000 BBL/d to the complex's current capacity of 437,000 BBL/d. Part of the company's South Texas Asset Repositioning (STAR) program, the project will improve gas oil and distillates yields. Fluor Corporation (NYSE:FLR) (Irving) is providing engineering and procurement for the expansion, which is planned for completion in early 2022. For more information, see Industrial Info's project report.
Marathon announced an agreement last week to sell its Speedway gas station chain to 7-Eleven Corporation (Dallas, Texas) for $21 billion in cash, effective next year. The company also plans to benefit from a $1.1 billion income tax refund that was made possible by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a stimulus measure that was enacted in response to the COVID-19 pandemic.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
Marathon said last week it would indefinitely idle its 167,000-barrel-per-day (BBL/d) Martinez refinery in California and its 26,000-BBL/d Gallup refinery in New Mexico. Both facilities have been idled since April due to the COVID-19 pandemic and low fuel demand.
Industrial info is tracking more than $3 billion worth of project activity by Marathon, with the lion's share of that investment ($2 billion) in Texas.
Marathon last week reported $9 million in net income for the just-ended quarter, a sharp fall from $1.1 billion for the same quarter of 2019.
"We began April with demand at historic lows," Chief Executive Officer Mike Hennigan said in a press release. "Despite seeing some recovery during the quarter, demand for our products and services continues to be significantly depressed, particularly across the West Coast and Midwest."
"Closures as a result of the tough refining business climate ahead of us have been amplified by the impact of the pandemic," Hennigan said. However, the company is evaluating the revival of the Martinez refinery to produce up to 48,000 BBL/d of renewable diesel.
"We have the unique opportunity to take advantage of the strong set of logistics assets for the area and also have three significant processing units that are an ideal fit for making renewable diesel," Hennigan said during the company's August 3 earnings conference call.
"These advantages should drive significantly lower capital requirements compared to greenfield investments, and if pursued, enable initial production as early as 2022 with the option to ramp up from there," Hennigan said, adding that "the renewable positioning is going to be beneficial to us because it aligns with California's low carbon fuel standards."
The capital expenditures for the first phase of the repurposing of the refinery "is about the same amount of capital that we would put into a planned turnaround for the facility," he said.
Marathon had also looked at selling its Gallup refinery, but "we did not get something we could execute on," Hennigan said.
Going forward, Hennigan said he was confident the company would meet its $950 million expense reduction target for 2020, and was on track to lower capital spending by $1.4 billion for the year. For more information, see May 6, 2020, article - Marathon Petroleum Reduces 2020 Capex in Wake of $9.2 Billion First-Quarter Loss.
Looking to the third quarter, Chief Financial Officer Don Templin said planned turnaround costs are projected to be $270 million, which includes hydrocracker turnarounds at its Los Angeles facility in California, a full plant turnaround in Kenai, Alaska, and catalyst changes at its Galveston Bay, Texas, and Garyville, Louisiana, operations.
The company also expects to complete construction of a 12,000-BBL/d renewable diesel facility in Dickinson, North Dakota, and achieve startup and production by the end of this year. For more information, see Industrial Info's project report.
At Marathon's Galveston Bay Refinery in Texas City, Texas, work continues on a crude unit expansion that will add 40,000 BBL/d to the complex's current capacity of 437,000 BBL/d. Part of the company's South Texas Asset Repositioning (STAR) program, the project will improve gas oil and distillates yields. Fluor Corporation (NYSE:FLR) (Irving) is providing engineering and procurement for the expansion, which is planned for completion in early 2022. For more information, see Industrial Info's project report.
Marathon announced an agreement last week to sell its Speedway gas station chain to 7-Eleven Corporation (Dallas, Texas) for $21 billion in cash, effective next year. The company also plans to benefit from a $1.1 billion income tax refund that was made possible by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a stimulus measure that was enacted in response to the COVID-19 pandemic.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
