Total expects to approve Texas cracker in coming months; First Gulf Coast ethane shipment reaches Europe
Petrochemicals news you need to know
Total expects to approve Texas cracker in coming months
Total intends to sanction its 1 million ton-per-year Port Arthur cracker project in the coming months, according to Chairman and CEO Patrick Pouyanné. FEED studies were completed in summer, and Total is now discussing “a very competitive cost”, Pouyanné said.
Pouyanné made the comments at a company investors’ day, where Total revealed it would target capital expenditure of $15 billion to $17 billion per year from 2017, $2 billion less than previous guidance.
The Port Arthur site includes a 169,000 barrel-per-day-capacity refinery and an existing 1 Mt/y steam cracker, the latter of which is a joint venture with BASF. In 2013, Total and BASF adapted the steam cracker to meet 80% of its feedstock needs with ethane, butane and propane from shale gas – as opposed to more-costly naphtha.
First Gulf Coast ethane shipment reaches Europe
The first shipment of ethane from the U.S. Gulf Coast reached Europe in mid-September, according to the Energy Information Administration.
The JS INEOS Intrepid sailed from Enterprise Product Partners’ new export terminal in Morgan’s Point, Texas, which has an export capacity of up to 200,000 b/d of liquefied ethane. The shipment was delivered to the INEOS-operated ethane cracker in Rafnes, Norway.
Another export terminal, located at Marcus Hook, Pennsylvania, has been shipping ethane to Europe since March this year. A cracker at Stenungsund in Sweden, owners by Borealis, is expected to begin receiving ethane from Marcus Hook later this year. Another INEOS cracker in Grangemouth Scotland, is expected to receive deliveries from Morgan’s Point when it starts up next year.
INEOS, SABIC, and Reliance will be the primary shippers out of Morgan’s Point, according to Petrochemical Update’s U.S. Polyethylene, Ethylene & Ethane Export Report 2016-2020. The U.S.-Europe routes are the first long-haul seaborne trade routes for ethane. INEOS is building eight 27,500 cubic-meter-capacity ships in order to meet its goal of moving 40,000 b/d of ethane gas from the U.S. to Europe.
Maersk has eye on digital in decision to restructure
A.P. Moller-Maersk will become an integrated transport and logistics company focused on digital solutions under a restructuring of the company. It will first split into a Transport & Logistics division and an Energy division. The board has set an objective of spinning off the Energy division, consisting of oil and oil-related businesses, within two years.
Maersk is the world’s largest container-shipping company by number of vessels. Its board decided different solutions were needed for the energy businesses, and that its main growth focus should be to deliver best-in-class transportation and logistics services with a focus on digital services and individualized customer solutions.
Transport & Logistics will consist of Maersk Line, APM Terminals, Damco (a provider of global logistics solutions), Svitzer (safety and support services at sea), and Maersk Container Industry. By managing and operating all these business within one division, Maersk hopes to enable profitable growth through stronger collaboration and disciplined capital allocation.
Maersk has set out the following strategies for the individual businesses:
• Maersk Line will grow market share organically and through acquisitions;
• APM Terminals will focus on cost and utilization, and will increase its focus on operational excellence to enhance returns and deliver improved service to existing and new third-party customers;
• Damco and Maersk Line will collaborate to deliver new innovative customer solutions supported by significant investments into digital technology;
• Svitzer will pursue a growth strategy based on its market-leading position; synergies with APM Terminals and Maersk Line will be explored; and
• Maersk Container Industry will collaborate with Maersk Line on technology development and efficient production planning.
Moody’s: North America refining outlook remains negative
The outlook for the refining and marketing industry in North America and Europe, the Middle East and Africa remains negative over the next 12-18 months, Moody’s said in a new report.
The amount of gasoline produced in 2015 and the first half of 2016 on the back of low crude prices has outpaced demand for gasoline and distillates in every major economy, the rating agency warned.
Refineries will see their earnings decline through next year as a result of slowing demand, with fuel inventories to remain above historical averages, further constraining margins, said Moody’s analyst Arvinder Saluja.
In the U.S., favorable, but narrow, crude price differentials and cost advantages stemming from cheaper natural gas will not fully offset weaker margins. Refiners, particularly those on the East Coast, will pause operations for maintenance, helping to reduce capacity utilization, though the reduction won't be uniform, Saluja said.
Moody’s further predicted that U.S. refiners will increasingly look for ways to avoid the escalating costs of government-mandated renewable fuel credits, or renewable identification numbers (RINs), which it noted could also squeeze margins next year. RINs are a particular liability for independent refiners and fuel importers without meaningful retail operations, including Valero Energy, CVR Refining LP, PBF Energy and HollyFrontier, it said.