Friday, April 19, 2019

U.S. refiners planning major plant overhauls in second quarter


https://www.reuters.com/article/us-usa-refinery-overhauls/us-refiners-planning-major-plant-overhauls-in-second-quarter-idUSKCN1RV0NV

HOUSTON (Reuters) - U.S. oil refiners are planning a heavy slate of plant overhauls in the second quarter, with total production this month off 8.5 percent compared with the start of the year, according to data from the U.S. Energy Information Administration.

Early spring and winter traditionally are heavy periods for U.S. refinery maintenance. But refiners are planning more upgrades than usual in the first half of 2019 to avoid fall and winter shutdowns as they prepare to meet coming low-sulfur standards. 

This year’s maintenance schedule and higher crude prices helped push U.S. gasoline prices to a national average of $2.83 a gallon last week, up 26 percent since the start of the year, according to data from the American Automobile Association. U.S. crude futures rose 32 percent in the first quarter. 

International Maritime Organization (IMO) 2020 is a standard for maritime diesel that takes effect on Jan. 1 and is designed to reduce air pollution. Refiners have been revamping their plants to make IMO 2020 compliant fuel. 

“They will push (winter) turnarounds later into 2020 to take advantage of that margin bump from the switch to IMO 2020,” said Susan Bell, a senior associate at energy consultancy IHS Markit.

Most U.S. refiners typically ramp up production of motor fuel during the second quarter to build inventories for the summer driving season. But Bell said an average of 1 million barrels per day (bpd) of crude oil refining capacity could be offline through the second quarter. 

Work on refiners’ crude distillation units (CDUs) and catalytic crackers helped send volumes down to 15.85 million bpd in the last week of March, from 17.5 million bpd in the first week of January, the EIA said. CDUs generate feedstocks for fuel processing units such as catalytic crackers. 

Among the refiners scheduling major maintenance this month are Valero Energy Corp and BP Plc. Valero’s Memphis, Tennessee, refinery will shut its 65,000 bpd gasoline producing fluidic catalytic cracking unit for a 60-day overhaul the last week of April. 

BP is shutting one of two small CDUs at its 413,500 bpd Whiting, Indiana, refinery on Monday for 30 days of work. The Whiting refinery is BP’s largest in North America. 

Work also is continuing this month on a planned overhaul of the 112,000 bpd gasoline-producing residual catalytic cracking unit at Royal Dutch Shell Plc’s 218,200 bpd Norco, Louisiana, refinery. That unit is expected to restart in the first full week of May.

Two other major overhauls finished during the switchover between the quarters. 

Exxon Mobil Corp recently finished CDU overhauls at two plants: its 560,500 bpd Baytown, Texas, refinery wrapped up work on its largest CDU in late March and the company’s 502,500 bpd Baton Rouge, Louisiana, refinery restarted its second-largest crude unit on Monday.

Thursday, April 18, 2019

PB Tankers takes issue with US blacklisting



Italian-based PB Tankers has expressed concern at being included on the US Office of Foreign Assets Control (FAC) blacklist for allegedly trading with Venezuela.
 
FAC recently issued its latest list of tanker companies and vessels to be blacklisted for trading with Venezuela.
 
The following companies were added to the list - Jennifer Navigation Ltd, Large Range Ltd, Lima Shipping Corp, and PB Tankers.
 
As for the ships involved, they were named as ‘Alba Marina’, a floating storage tanker claimed to be attached to PB Tankers; ‘Gold Point’, ‘Ice Point’,’Indian Point’, ‘Iron Point’ and ‘Silver Point’, all attached to PB Tankers; ‘Nedas’ attached to Jennifer Navigation; ‘New Hellas’ attached to Lima Shipping and S-Trotter, attached to Large Range.
 
In response, PB Tankers said it was shocked and concerned by the action taken by OFAC in adding the company and a number of the its vessels to the current SDN (Specially Designated Nationals) list in relation to trade with Venezuela.
 
This was done without any notification or contact with the company, who only became aware through the media. As a consequence, we will be taking immediate steps to ensure that both are de-listed as a matter of urgency, the company said.
 
PB Tankers, also said that as an Italian shipping company with more than 100 years of service to the international community, has been taking regular advice from both its UK and US lawyers and has been diligent in taking all possible steps to ensure compliance with current US sanctions including, but not limited to, possible restriction of trade under a single timecharter contract, which pre-dates the current sanctions regime.
 
The company further claimed that it does not have any ships in Venezuela, nor will be trading into or out of Venezuela.
 
PB Tankers will continue to meet its obligations as a matter of international law, the company stressed.

Wednesday, April 17, 2019

Red Hot Permian Set To Jolt U.S. Shale Output To New Record

Permian Basin.jpg

https://oilprice.com/Energy/Crude-Oil/Red-Hot-Permian-Set-To-Jolt-US-Shale-Output-To-New-Record.html

Crude oil production from the seven key shale regions in the United States is expected to increase by 80,000 bpd from April to hit a record 8.46 million bpd in May, with the Permian accounting for half of the monthly growth, the EIA said in its latest Drilling Productivity Report.

Crude oil production from the seven major shale producing regions is set to increase from 8.38 million bpd this month to 8.46 million bpd next month. The fastest-growing region, the Permian, is expected to see its crude oil production jump by 42,000 bpd from April to hit a record high of 4.136     million bpd in May, according to the EIA estimates—a figure that would place the US hotspot as OPEC’s third-largest producer behind only Saudi Arabia (9.79 bpd) and Iraq (4.52 bpd).
In the report forecasting production in May, the EIA sees the Niobrara region adding 22,000 bpd to reach oil production of 764,000 bpd in May—this would be the second-largest growth after the one in the Permian. The Bakken, the Eagle Ford, and Appalachia regions are also expected to see higher production in May compared to April, while Anadarko region’s crude oil production is forecast to drop slightly next month.

After oil prices collapsed by some 40 percent in the fourth quarter of 2018, U.S. shale drillers put some brakes on drilling activities. U.S. oil production growth has slowed, with average daily U.S. crude oil production slipping in January from the previous month for the first time in nearly six months, according to the EIA’s report from end-March.

In terms of total U.S. crude oil production, the EIA estimated in its April Short-Term Energy Outlook last week that U.S. crude oil production averaged 12.1 million bpd in March, up by 300,000 bpd from the February average. EIA now expects U.S. crude oil production to average 12.4 million bpd this year and 13.1 million bpd next year, chiefly driven by the Permian production growth. 

By Tsvetana Paraskova for Oilprice.com

Tuesday, April 16, 2019

Citgo's future at stake as creditor seeks $1.4B from PDVSA in lawsuit

Flags fly outside Citgo Petroleum Corp. headquarters stands in Houston, Texas, U.S., on Thursday, Feb. 14, 2019.

NEXT: See the world's largest oil refineries. Photo: Loren Elliot, Bloomberg

https://www.chron.com/business/energy/article/Future-of-Citgo-at-stake-as-creditor-seeks-1-4B-13769799.php

The future of Houston's Citgo Petroleum is taking center stage in a federal appeals court this week as creditors for its parent company, Venezuela state-owned PDVSA, continue attempt to recoup billions of dollars in debt owed by the Venezuelan government.

Oral arguments were heard Monday afternoon in the U.S. Third Circuit Court of Appeals in Philadelphia the case involving one of PDVSA's creditors, Crystallex International Corp. a defunct Canadian gold mining company seeking to collect on $1.4 billion award owed by Venezuela.

Crystallex has targeted the Houston refiner Citgo Petroleum Corp. because it is the biggest U.S. asset of the crisis-ridden, cash-strapped Venezuelan government. In August 2018, a federal judge agreed that PDVSA's assets in the United States., namely Citgo, could be used to satisfy Venezuela's debts owed to Crystallex and now that decision is under appeal.It could take weeks for the panel of three judges to make a decision on the appeal.

Last month, the court approved Venezuela's opposition government, led by interim president Juan Guaidó,to intervene in the case. Guaidó is trying to stop Crystallex and other creditors from carving up the country's foreign assets. His administration is arguing Citgo's loss could harm the country's chances of political and economic recovery.


Venezuela already has paid Crystallex $500 million  and attorneys for Guaidó's administration argued in court documents that Crystallex's additional attempts "ignore the economic reality of the Republic's humanitarian and economic crisis." They also said it could upset U.S. foreign policy.

Guaidó, who is recognized by the United States as Venezuela's legitimate leader, is trying to consolidate control over the country's assets abroad as he seeks to setup  his government-in-waiting for rebuilding the country once it wrestles control away from Nicolas Maduro's regime. In February, Guaidó successfully replaced Citgo Petroleum's board of directors with new leaders in Houston.

For the past few years creditors have  circled Citgo, which is valued at up to $8 billion by some analysts, as they seek to recoup billions owed to them by PDVSA and the Venezuelan government. Venezuela previously has settled similar debt-collecting lawsuits with Houston company ConocoPhillips and Rusoro Mining Ltd. Similar to Crystallex, these companies sought to enforce arbitration awards after a nationalization campaign expropriated their Venezuelan investments.

But the Trump administration wants to keep Citgo intact to help the new government rebuild the country ravaged by economic and political turmoil, hyperinflation and shortages in food, water and electricity. The Trump administration has granted Citgo certain exemptions from U.S. oil sanctions against Venezuela and PDVSA to allow  Citgo to continue operating and preserve at least 3,400 jobs in the U.S., including about 800 in the Houston area.

Citgo has distanced itself from the Maduro regime and recently secured a $1.2 billion loan help fund its daily operations.

Separately, Citgo is also under threat in a 2020 bond PDVSA took out with Citgo as collateral. PDVSA has an April 27 deadline to pay $71.6 million for a 2020 bond; it default bondholders could exercise a lien to sell 50.1 percent of Citgo Holding to recover their losses, according to the international investment bank and consulting firm Caracas Capital Markets.

Monday, April 15, 2019

Sinopec continued to lead the world’s biggest oil and gas companies in 2018, enjoying a double-digit revenue growth when compared to 2017.

The majority of the ten biggest witnessed a similar double-digit growth, which was as high as 31.4% for Rosneft. Offshore-technology.com profiles the ten biggest oil and gas companies by 2018 revenues, excluding the state-owned Saudi Aramco.
Index of this series of articles covering the top 10 Oil & Gas companies:
  • 10. Phillips 66
  • 9. Lukoil
  • 8. Rosneft
  • 7. Chevron
  • 6. Total
  • 5. ExxonMobil
  • 4. BP
  • 3. China National Petroleum Corp (CNPC)
  • 2. Royal Dutch Shell
  • 1. China Petroleum & Chemical Corporation (Sinopec)

Series: The Biggest Oil & Gas Companies in 2018

Read the 1st piece of this series of articles; which shows the revenue of Phillips 66, Lukoil and Rosneft.

Read the 2nd piece of this series of articles; which shows the revenue of Total, Chevron and ExxonMobi

4. BP Plc – $298.75bn

British multinational oil and gas company BP registered a 24.37% year-on-year revenue growth in 2018, earning $298.75bn. Revenues from its downstream business increased by 23.88% to $270.11bn, whereas the upstream segment’s revenues witnessed a 30.92% growth to reach $27.83bn.

The company’s upstream production increased by 8.2% to an average of 3.7 million barrels of oil-equivalent a day (Mboed) in 2018. Crude oil sales contributed $65.27bn of revenue, whereas oil products contributed $195.466bn and natural gas, LNG, and natural gas liquids (NGLs) contributed $21.74bn to the revenue.

BP established six major upstream projects in 2018, namely Clair Ridge, Western Flank B, Thunder Horse Northwest Expansion, Shah Deniz Stage Two, Taas-Yuryakh Expansion, and Atoll Phase One.

3. China National Petroleum Corp (CNPC) – $346bn

State-owned China National Petroleum Corp (CNPC) reported a 25% year-on-year growth to achieve $346bn operating revenue in 2027, out of which CNPC’s listed unit PetroChina contributed $298bn.

The biggest oil and gas producer of the country, PetroChina produced 1.1 billion barrels of oil and gas-equivalent in the first three quarters of 2018, which was a 2.2% increase compared with the same period in 2017. The company’s marketable gas output increased by 4.8% to 2.66 trillion cubic feet (tcf) during the same period.

CNPC operates 26 refineries with a combined crude processing capacity of 152 million tonnes per year (Mtpa) and an oil and gas pipeline infrastructure spanning 85,582km. Its overseas exploration and production activities are also spread across 38 countries in Africa, Central Asia, Russia, South America, the Middle East, and Asia-Pacific.

2. Royal Dutch Shell – $388.37bn

British-Dutch oil and gas company Royal Dutch Shell’s operating revenue was up by 27.26% to reach $388.37bn in 2018. The company’s downstream business registered a 26.42% year-over-year growth to reach $334.68bn and accounted for 86.17% of the total revenue.

The company’s integrated gas business, which includes liquid natural gas (LNG) marketing and trading, as well as gas-to-liquids projects grew by 25.34% to $43.764bn and accounted for 11.27% of the total operating revenue.

Shell’s upstream earnings increased by 1.99% to $9.89bn because of the higher realised oil and gas prices during the year, despite the 2% reduction in its upstream production.

1. China Petroleum & Chemical Corporation (Sinopec) – $426bn

China Petroleum & Chemical Corporation, also known as Sinopec Group, registered a 22.09% year-over-year growth to achieve RMB2.8tn ($426bn) of operating revenue in 2018. The company’s refinery and distribution segment accounted for approximately 60% of the revenue. Its refinery throughput during the year increased by 2.31% to 244 million tonnes (Mt). The total domestic sales volume of refined oil products increased by 1.4% to 180.24Mt.

The other business segments of the company include oil and gas exploration and production, petroleum engineering, chemical marketing, petrochemical refining and refined products marketing, engineering and construction, and international trade.

Sinopec’s crude oil production decreased by 1.75% to 288.51 million barrels, while natural gas production increased by 7.08% to 977bcf during the year. Sinopec is an integrated energy and chemical company incorporated in the People’s Republic of China.

https://tankterminals.com/news/the-biggest-oil-gas-companies-in-2018-3-3/?utm_medium=email&utm_campaign=Subscribers%20-%20Week%2015&utm_content=Subscribers%20-%20Week%2015+CID_61bbcc5231f6ca642f49a5f6ff01c919&utm_source=weekly&utm_term=The%20Biggest%20Oil%20%20Gas%20Companies%20in%202018%2033

Saturday, April 13, 2019

Exxon and Others Say U.S. Government Sold Toxic Crude Oil

Oil pipelines at the Bryan Mound Strategic Petroleum Reserve in Freeport, Texas. Oil pipelines at the Bryan Mound Strategic Petroleum Reserve in Freeport, Texas.Photographer: Luke Sharrett/Bloomberg
https://www.bloomberg.com/news/articles/2019-04-12/tainted-oil-exxon-others-say-u-s-government-sold-toxic-crude
  • Energy Department paid $1 million to clean one oil cargo
  • Exxon, Shell, Macquarie and Petrochina all complained to DOE
(Bloomberg) -- Exxon Mobil Corp. is the latest company to raise concerns that a stockpile of U.S. government crude is tainted with poisonous gas.

The American energy giant said some of the oil it purchased last year from the Energy Department’s Strategic Petroleum Reserve, or SPR, contained "extremely high levels" of hydrogen sulfide, according to emails obtained by Bloomberg under the Freedom of Information Act. In some cases, the gas level was 250 times higher than government safety standards allow.

"The Department of Energy takes safety, security and environmental impacts involving SPR activities very seriously," agency spokeswoman Jess Szymanski said. "Last fall, an SPR cargo received by Exxon Mobil was found to contain higher-than-expected levels of hydrogen sulfide. Since then, the Department has worked with Exxon to resolve this concern, and find alternate options for the cargo’s delivery."

Spurious Claims?

Analysts have pointed to the stockpile as a safeguard against tightening crude supplies after U.S. sanctions on Iran and Venezuela curbed their oil exports. But Exxon’s discovery, which follows complaints by Royal Dutch Shell Plc, Macquarie Group Ltd and PetroChina Co., suggest that the reserve may not offer refiners as much insurance against diminishing volumes of higher sulfur, or sour, crude as previously thought.

The Energy Department disputed claims that it repeatedly sold tainted crude, saying that some companies’ high hydrogen sulfide readings were "spurious" or the result of contamination during shipping. In PetroChina’s case, however, the agency acknowledged spending around $1 million to clean up a contaminated cargo.

The prospect of tainted crude in the reserve complicates future sales of U.S. oil, a key tool for funding government programs. A 5 million-barrel sale is planned for 2019, and 221 million barrels of oil are planned for sale from 2020 to 2027.

Safety Risks

While hydrogen sulfide occurs naturally in crude, producers often take pains to remove it because it can put workers at risk and corrode pipelines and refineries. Many pipelines have capped the permitted amount of hydrogen sulfide, or H2S, at 10 parts per million (ppm).

"Refineries don’t want high H2S in their plants for safety reasons, especially with personnel having to access storage tanks where the oil is stored,” said John Auers, executive vice president at energy consultant Turner Mason & Co.

Exxon’s Discovery

Exxon was one of five companies that purchased oil in an Energy Department sale in August. Exxon took 1.5 million barrels of Bryan Mound sour crude -- a high sulfur oil that’s recently become more expensive as global supply shrink -- by pipeline to Texas City. There, the company discovered hydrogen sulfide levels that were at 5,000 ppm, according to emails sent to the department in November by Mattias Bruno, a lead oil trader at Exxon Mobil.

The exposure limit set by the Occupational Safety and Health Administration is 20 ppm. Exposure at 500-700 ppm could cause a person to collapse in five minutes and die within an hour. After discovering high levels of the gas, Exxon launched an investigation, according to the emails.

The Energy Department in a statement suggested that Exxon’s readings were possibly erroneous, noting that the facility where the contamination was discovered was not "H2S qualified." Oil was delivered through other facilities without incident, the agency said.

An Exxon spokesman declined to comment.

Other Complaints

Shell, Macquarie and PetroChina have also complained about hydrogen sulfide levels in government crude. In those cases, the oil was pumped from Bryan Mound to the Freeport, Texas, terminal owned by Seaway Crude Pipeline LLC -- a joint venture between Enterprise Products Partners LP, the operator, and Enbridge Inc. -- before being loaded onto vessels.

In a statement to Bloomberg, the Energy Department dismissed Shell’s complaint as spurious and attributed the Macquarie incident to a paperwork error. No payment was made to either company.

However, the agency verified PetroChina’s concerns and paid to clean up the contaminated oil at a cost of around $1 million.

Macquarie declined comment. Representatives from Shell and PetroChina did not respond to requests for comment. Enterprise did not immediately respond to a request for comment.

If the stockpiles are contaminated, the elevated levels of hydrogen sulfide could be the result of a high-sulfur oil put into the reserve years ago that’s blended with newer oil, according to chemical engineers and testing experts. It could also be the result of a naturally occurring bacteria that reduces sulfur to hydrogen sulfide, which could have grown in the caverns over decades.
Price Questions

So far, the quality concerns raised by companies haven’t affected bid prices for SPR oil, according to the Energy Department. But if crude quality issues persist, that could have implications for the future sales of oil from the SPR, which is about 60 percent sour crude.

“The Congressional Budget Office might conceivably set a lower price deck for future sales to account for discounts associated with crude quality,” said Kevin Book, managing director of ClearView Energy Partners LLC.

(Updates to include all firms owning the Freeport terminal in 13th paragraph.)
--With assistance from Dave Merrill.

To contact the reporter on this story: Catherine Ngai in New York at cngai16@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine Traywick, Joe Ryan

For more articles like this, please visit us at bloomberg.com