Marathon Weathers Winter Storm Uri, Jumps on Renewable Fuels Bandwagon

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Researched by Industrial Info Resources (Sugar Land, Texas)--Like other Texas industrial asset holders, Marathon Petroleum Corporation (NYSE:MPC) (Findlay, Ohio) took a hit when Winter Storm Uri came through the state; however, the outlook for the company is growing more positive in the face of vaccine rollouts and increasing demand for transportation fuels, although these still remain lower than historical levels. For the first quarter of 2021, Marathon said it saw positive earnings before interest, taxes, depreciation and amortization (EBITDA) in its Refining & Marketing segment for the first time since the onset of the COVID-19 pandemic, driven by higher refining margins. Additional changes are on the horizon as, like other refiners, Marathon begins rolling out plans to produce renewable fuels.

During Uri, Marathon's El Paso and Galveston Bay refineries in Texas were shut down. In the company's earnings conference call, Chief Financial Officer Maryann Mannen said neither refinery experienced significant mechanical damage. "El Paso was able to quickly resume operations, and Galveston Bay was able to begin its planned turnaround during the period," she said. If you are a subscriber to Industrial Info's Refinery database, see plant profiles for the El Paso North, El Paso South and Galveston Bay refineries.

Marathon is underway with significant projects at its Galveston Bay Refinery in Texas City to expand its crude units to improve gas oil and distillate yields. In addition, Marathon is expanding the 64,000-barrel-per-day (BBL/d) hydrocracker to increase residual oil processing abilities and constructing new offsite utilities. The projects kicked off in 2019 and are expected to be completed by next year. If you are a subscriber to Industrial Info's Refining database, click here to view these projects.

Chief Executive Officer Mike Hennigan said that Marathon's board of directors in the first quarter had approved the conversion of the company's Martinez Refinery in California into a 48,000-BBL/d renewable fuels facility. "We expect commissioning of Martinez to begin in the second half of 2022 with approximately 17,000 BBL/d of capacity," he said. "Additionally, we expect to reach full capacity of approximately 48,000 BBL/d by the end of 2023." The facility will primarily produce renewable diesel.

In April 2020, Marathon idled production at the Martinez refinery after California's COVID-19 shelter-at-home orders cut demand for gasoline and jet fuel. Last summer, Marathon said it would permanently stop processing crude oil at the Martinez plant, which employed around 740 staff workers in addition to contract workers. If you are a subscriber to Industrial Info's Refinery database, click here to see the plant profile.

In addition to the renewable fuels plant, Marathon is moving toward plans for its goal of a 30% reduction in Scope 1 and 2 greenhouse gas emissions (emissions created from its assets and from purchased energy) by 2030 by installing wind turbines at another facility, and aims to reduce methane emissions 50% by 2025.

Marathon had an 83% utilization rate in the first quarter and expects total throughput volumes in the second quarter to be roughly 2.7 million BBL/d, with planned turnaround costs coming in at about $100 million.

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.