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Marathon Petroleum restarts Detroit refinery after major expansion project

11.06.2012  | 

The $2.2 billion, four-year Detroit Heavy Oil Upgrade Project increased the refinery's heavy-oil processing capacity to 100,000 bpd, five times the amount it could process before the project. Heavy oil is usually sold at discounts to light varieties, which are easier to process.

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By BEN LEFEBVRE

Marathon Petroleum restarted its newly expanded 120,000-bpd refinery in Detroit, finishing a project that will increase greatly the amount of Canadian crude oil the refinery uses, the company said Tuesday.

The $2.2 billion, four-year Detroit Heavy Oil Upgrade Project increased the refinery's heavy-oil processing capacity to 100,000 bpd, five times the amount it could process before the project.

Heavy oil is usually sold at discounts to light varieties, which are easier to process.

"Most all of the units have been brought back online and are producing finished products," Marathon Petroleum spokesman Shane Pochard said.

Marathon Petroleum's Midwest refineries already have access to the crude oil produced in the US Midcontinent area, where a technology-driven production boom has led to a glut at the Cushing, Okla., storage hub.

Findlay, Ohio-based Marathon Petroleum and other refiners have greatly expanded their profit margins in recent years by turning the discounted Midcontinent oil into fuel that then can be sold at prices charged for fuel made by more expensive imported oil.

Marathon Petroleum's refining-and-marketing unit reported gross margin of $13.12/bbl for the third quarter, down 0.5% from the year before.

About 7% of Marathon Petroleum's total crude output now can come from heavy oils from Western Canada or the Gulf Coast and should add up to $350 million/year to the company's earnings, according to analysts at Raymond James.

"This project provides the flexibility necessary of Marathon Petroleum to chase down the most economic barrel," Raymond James analyst Cory Garcia said in a client note.


Dow Jones Newswires



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Coe William Case
11.07.2012

The account fails to mention the Detroit Marathon management that was responsible for the implementation of the upgrade. It was a tremendous project and I think they personally deserved some credit!

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