Marathon Petroleum Raises Earnings, Lifts Capital Expenditures

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Researched by Industrial Info Resources (Sugar Land, Texas)--Marathon Petroleum Corporation (NYSE:MPC) (MPC) (Findlay, Ohio) is planning $1.7 billion this year in capital expenditures, up from $1.4 billion in 2016, company executives said Wednesday. In addition, MPLX LP (NYSE: MPLX), Marathon's master limited partnership spinoff for the midstream sector, plans capital expenditures between $1.4 billion and $1.7 billion this year.

Chief Executive Officer Gary Heminger said during the company's fourth-quarter 2016 earnings conference call that Marathon will spend $1.5 billion on its South Texas Asset Repositioning (STAR) project through 2021. The STAR project includes integrating Marathon's refineries in Texas City, Texas, and Galveston Bay, Texas, to create the second-largest refining complex in the U.S.

Among the projects at these refineries being tracked by Industrial Info is a gasoline hydrotreater unit addition at the Texas City refinery. The project involves constructing a 35,000-barrel-per-day (BBL/d) gasoline hydrotreater to reduce sulfur content in gasoline from 30 parts per million (ppm) to 10 ppm to comply with Tier 3 gasoline regulations. The project has an estimated total investment value (TIV) of $130 million. Fluor Corporation (NYSE:FLR) (Irving, Texas) is acting as engineering, procurement and construction firm on the project, which began construction in late 2016 and is expected to be completed in the third quarter of this year.

At the Galveston Bay refinery, Industrial Info is tracking a $50 million residual hydrotreater unit expansion that will increase the capacity of the existing 64,000-BBL/d hydrotreater by adding 20,000 BBL/d to reduce sulfur content. The project is planned to kick off early next year and will take about two years to complete.

Heminger also spoke positively of the Trump administration, saying "We are encouraged by the early tones set around energy policy by the new administration. Although the ultimate changes remain to be seen, it appears that we have a legitimate opportunity to walk back some of the regulatory burdens that the industry has had to deal with over the last several years, including excessive delays on important and needed pipelines, a potential revisit on the requirements of the renewables fuel standard, as well as much needed reform on taxes."

Marathon reported fourth-quarter 2016 net earnings of $227 million, compared with net earnings $187 million in fourth-quarter 2016.

Among the largest MPLX projects being tracked by Industrial Info is the grassroot cryogenic natural gas processing plant near Washington, Pennsylvania. The complex will process up to 200,000 million standard cubic feet per day of natural gas and will have a natural gas liquids production capacity of up to 20,000 BBL/d. The project is expected to kick off during the first quarter of this year and be completed by the end of 2017.

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