Marathon Petroleum Enjoys Strong Refined Product Exports

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Researched by Industrial Info Resources (Sugar Land, Texas)--Marathon Petroleum Corporation (NYSE:MPC) (MPC) (Findlay, Ohio) emerged relatively unscathed from the effects of Hurricane Harvey in September and, in fact, posted a boost in third-quarter profits amid strong refinery throughput and refined product exports, company executives said last week.

Marathon reported third-quarter 2017 earnings of $903 million, compared with $145 million in third-quarter 2016. The company's Refining & Marketing segment reported third-quarter income from operations of nearly $1.1 billion, an $845 million increase from third-quarter 2016. Results were largely driven by higher blended crack spreads and the ability to maintain high utilization rates, with refinery throughputs exceeding 2 million barrels per day, the company said in its earnings release. Marathon's refineries saw record crude throughput in August in spite of the hurricane, which struck Texas in late August.

Chief Executive Officer Gary Heminger said in the earnings conference call with investment analysts that during the hurricane, "our system did not experience material flooding or damage, but we did operate at a reduced rate at our Galveston Bay Refinery for a few days to enable pipelines, marine vessels and other logistics assets to resume normal operation. After the storm passed, our team resumed normal refinery production rates rapidly, and restarted critical logistics infrastructure, positioning [Marathon] as the first to resume dock shipments to a market in need of supply for recovery efforts."

Marathon President Donald Templin said refinery throughputs exceeded 2 million barrels per day for the second consecutive quarter.

Demand for exports continued to be strong in the third quarter, Templin continued. Exports by Marathon's Galveston Bay, Texas, and Garyville, Louisiana, refineries averaged 331,000 barrels per day (BBL/d), up from the second quarter of this year and third quarter of 2016.

"Exports remain a fundamental component in our refined products distribution, and we continue to invest to support additional export capacity in our system," Templin said.

Raymond Brooks, senior vice president, refining, told investment analysts last week that "we believe the export market is attractive, we believe we're well situated given our Gulf Coast refineries...we're continuing to invest in upgrading or enhancing the capacity of our exports. And by 2020, we should be able to have a capacity of over 500,000 barrels a day from those two refineries, Galveston Bay and Garyville."

Industrial Info is tracking more than $3 billion in active Marathon projects. Much of the activity is tied to Marathon's South Texas Asset Repositioning (STAR) program. The STAR program will fully integrate Marathon's Galveston Bay and Texas City refineries, increase the overall crude processing capacity, increase distillate and gas-oil recovery, and improve the refinery's reliability, according to the company. For more information, see Industrial Info's project reports 300260505, 300260518 and 300347357, and April 12, 2017, article - Marathon Petroleum Picks Fluor for Texas Refineries Reconfiguration.

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