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11.01.2012  |  Thinnes, Billy,  Hydrocarbon Processing Staff, Houston, TX

Keywords: [Marathon] [BP] [Texas City] [refinery] [sale] [purchase] [European Commission] [biofuels] [food]

Marathon Petroleum Corp. plans to purchase BP’s Texas City refinery and related assets

Marathon Petroleum Corp. (MPC) has signed a definitive agreement to purchase BP’s 451,000-bpcd Texas City, Texas, refinery and associated natural gas liquids pipelines and four marketing terminals in the southeastern US. The base purchase price is $598 million, plus inventories estimated at $1.2 billion. The agreement also contains an earnout provision under which MPC could pay up to an additional $700 million over six years, subject to certain conditions. The acquisition is expected to be funded with cash on hand, and is anticipated to close early in 2013, subject to customary closing conditions and regulatory approvals. The BP Texas City refinery is one of the largest and most complex in the US, with a Nelson complexity index of 15.3. The refinery operates a 63,000-bpcd hydrocracker and a 29,700-bpcd coking unit. The facility is strategically positioned to provide products throughout the US Gulf Coast, Midwest and Southeast, as well as into export markets. The refinery has the flexibility to process a wide range of crude oils, and it has access to price-advantaged mid-continent and Canadian crudes. With the Texas City refinery, MPC will operate 1.64 million bpcd of refining capacity.

The European Commission intends to limit the use of biofuels derived from food crops to 5% for transport fuel. This would be a substantial change to its present biofuels policy. According to the EU’s climate-change and energy commissioners, Europe wants to cap the share of energy in the transport sector from food crop-based biofuels at current levels. The proposal, a draft of which was reported by Dow Jones Newswires, clashes with the target of having 10% of the energy used in transport coming from renewable sources by 2020. This goal was set by the EU three years ago because food crop-based biofuels account for most biofuels available in volumes at the moment. New types of alternative fuels are being developed, but they are mostly at the laboratory stage. At the same time, biofuels are expected to be the main renewable energy source used in transport in 2020.

State-owned oil company Pemex is working with Mexico’s federal government to manage limited natural gas supplies in the wake of a September 18 plant explosion near the northern border city of Reynosa that killed 30 workers. Pemex executives plan to increase gas imports from the US to maximum levels. The company is also working on a bypass that will reestablish gas flows from the Burgos fields to the central part of the country. The facility damaged by the blast is a new plant. The cause of the accident is still under investigation, although Pemex said it has no evidence to believe the explosion was intentional. The explosion initially halted production of about 800 million cfpd of natural gas from the Burgos fields.

ExxonMobil will spend more than $200 million to expand its Baton Rouge chemical and lubricants plants in Louisiana to raise capacity for synthetic lubricant base stocks manufacturing and lubricants blending, packaging and storage. The expansion will increase ExxonMobil’s global capacity of synthetic esters and alkylated naphthalene by more than 25% to meet demand for high-performance lubricants. The project will include construction of a blending center for synthetic aviation oil at the company’s lubricant blending plant in Port Allen, Louisiana. The new facilities in Baton Rouge will replace existing base stock manufacturing and aviation lubricants blending, packaging and storage operations in Edison, New Jersey, which will cease production when the new Louisiana facilities begin operation.

INEOS Europe has completed supply and infrastructure agreements that will secure a significant volume of ethane feedstock from the US for use by European cracker complexes. The company has agreed to a long-term deal with Range Resources for the lifting of ethane from the Marcus Hook facility in Pennsylvania, starting in 2015. Formerly a Sunoco refinery, the Marcus Hook facility is being used as a terminal operated by Sunoco Logistics Partners. The agreement is effective upon US Federal Energy Regulatory Commission (FERC) approval of the Mariner East project. INEOS also finalized pipeline transportation services and terminal services agreements for the shipping of ethane from western Pennsylvania to Marcus Hook with subsidiaries of Sunoco. The agreements will be valid for 15 years, and it will provide INEOS Olefins & Polymers Europe with significant supply options for the future, according to the company. It is expected that, when completed, the Mariner East project will transport approximately 70,000 bpd of ethane and propane from Houston, Pennsylvania, to the Marcus Hook terminal facilities.

Westlake Chemical will do planned maintenance and expand its Petro 2 ethylene unit in Lake Charles, Louisiana, in the first quarter of 2013. The company earlier said the turnaround would occur in the 2012 fourth quarter. This expansion will increase ethane-based ethylene capacity from 230 million lb/y to 240 million lb/y, targeting an ethylene integration strategy, company officials said. The unit is expected to be down approximately 50 days while the work is completed.

Valero Energy has restarted ethanol plants in Albion, Nebraska, and Linden, Indiana, amid improving margins. Valero idled operations in Nebraska and Indiana in June 2012, citing unprofitable returns. Each plant has the capacity to produce 120 million gpy of ethanol. A Valero spokesperson indicated that ethanol margins improved to the point where it became feasible to operate the plants again. A total of 120 employees work at the two plants. All of them remained on the payroll and at their jobs during the shutdown. Valero is now operating all 10 of its US ethanol plants, with a total capacity to produce 1.2 billion gpy.

BP has agreed to sell all of its Malaysian interests in purified terephthalic acid (PTA) production to India’s Reliance Industries, including the 610,000-tpy plant in Kuantan on Malaysia’s east coast. Reliance has agreed to purchase BP’s interest in the plant for $230 million in cash. Both parties anticipate completing the transaction in 2012. A BP executive said it made sense to sell this facility to Reliance because the company is already a significant feedstock supplier to the Kuantan plant. All plant staff are expected to transfer to the new owners under equivalent terms and conditions, according to officials involved with the sale. BP’s acetic acid manufacturing and marketing business in Malaysia is unaffected by this sale. BP’s net global PTA capacity is 7.5 million tpy from eight sites. BP’s PTA facility at Zhuhai, China, which is now under expansion, will add 1.25 million tpy by 2014, making it one of the world’s largest PTA manufacturing sites. HP

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