U.S. refinery rate drop shows crisis in downstream

Reuters via Calgary Herald ^ | Jan 21, 2010 | Joshua Schneyer and Rebekah Kebede

[MSF BU]

I wonder how long it would take Valero to turn on their Delaware plant?

[mad_as_he$$]

Long time. Serious POS. But they will try and bust the union before it starts again - if it ever does.

[MSF BU]

Long time as in months or years? There are nonunion models where everybody seems happy. Exxon and Nucor come to mind. I have no clue if this is even conceivable in Delaware. I guess that is why Toyota and Honda build cars far away from Detroit.

[thackney]

I think someone else will be turning it on.

Valero in talks to sell Delaware refinery
http://www.chron.com/disp/story.mpl/ap/business/6831215.html
Jan. 22, 2010, 6:53PM

[Repeal The 17th]

Is this saying that the existing refineries are under-utilized?
I had been thinking we did not have enough refining capacity.

[Abby4116]

I wonder how long it would take Valero to turn on their Delaware plant?

Valero Energy Corporation announced Friday it is negotiating the sale of its Delaware City assets to PBF Investments, LLC., a company formed by Europe's largest independent refiner Petroplus

Petroplus is acquiring failed US refineries - not sure what the reason is.

[hinckley buzzard]

From the point of view of the energy companies this is bad news. From the consumer standpoint, it is good news. It means we have excess capacity whereas before we were stretched to the limit. Less demand in a down economy also works against rises in price.

[Buchal]

About Petroplus
Petroplus International B. V. (Petroplus) was established in 1993 and has since developed into a leading player in the European refining market. Petroplus owns refineries in Antwerp, Belgium; Cressier, Switzerland and Teesside, United Kingdom. In addition, Petroplus recently announced the acquisition of the Belgian Refining Corporation, whose principle asset is a 120,000 barrel per day refinery in Antwerp, Belgium. This acquisition will result in an increase in Petroplus’s refining capacity to 355,000 barrels per day.

Petroplus is currently a wholly owned subsidiary of RIVR Acquistions B.V. RIVR will continue to develop its fast-growing 4Gas LNG terminalling and LNG marketing business which will be formally separated from and managed independently of Petroplus going forward. RIVR Acquisitions B.V., the parent company of Petroplus International B.V., is owned by funds and entities affiliated with Riverstone Holdings, The Carlyle Group, and Company management.

[Abby4116]

But if the reason given for closing Delaware City is correct, there isn't the demand for home heating oil and I find it hard to believe that the demand is going to increase in the near future.

[Freddd]

To: thackney
Is this saying that the existing refineries are under-utilized?
I had been thinking we did not have enough refining capacity

---

We were being told we did not have enough refining capacity......

[okie01]

I had been thinking we did not have enough refining capacity.

We didn't. But, come the recession, demand fell like a stone.

Refineries are high capital operations that need to run at a high percentage of capacity to be profitable. But pushing them into the 97-98% range, as we were, was dangerous, too.

[proud_yank]

They cut a huge expansion project at their refinery in Port Arthur, TX too.

How long before the slump moves its way upstream?

[thackney]

Currently our refineries are under-utilized. This is following several years of rather significant refinery expansion, combined with falling demand in the downturn economy.

We still import refined products. It can be cheaper to import gasoline and diesel, than to import crude oil and submit to US regulation and taxes.

[thackney]

Vallero spent too much too fast betting the high oil price wouldn’t slump so quick.

They invested heavily to take advantage of the cheaper, heavier oils. Then when the price of crude dropped, the delta between light and heavy really dropped and their investment gave them little return.

[Repeal The 17th]

Thanks for the reply ...
the equation is more complex than most people think.

[mad_as_he$$]

My guess is 1-5 years depending on demand. Valero may just sell it also.

[grey_whiskers]

SO remind me again why gasoline prices are still so high?

Cheers!

[thackney]

Price of oil.

Last time price of oil was this high, gasoline cost a little more than it does today.

[Dark Wing]

We are seeing the effects of permanent demand destruction.