Phillips 66 refineries to run in mid-90% range in Q3 2019
HOUSTON, July 26 (Reuters) - Phillips 66 plans to run the 11 refineries it operates in the mid-90% range of their combined 2.17 million barrel per day (bpd) capacity in the third quarter, the company said on Friday.
The company operates nine wholly-owned refineries with a combined capacity of 1.67 million bpd and two refineries co-owned with Cenovus Energy with a combined capacity of 502,000 bpd.
The transition to low-sulfur marine fuel on Jan. 1 is already affecting refined products markets but how exactly it will shape distillate and gasoline supply early next year remains unclear, Jeffrey Dietert, vice president of investor relations, said during a conference call with Wall Street analysts to discuss second-quarter results.
"We're expecting conversion of tanks in the September-ish time frame and expect shippers to be buying compliant fuels in the fourth quarter," Dietert said. "I think there are some early indications of compliant marine fuels trading at $12 to $15 a barrel over Brent. There's not a lot of liquidity in that market. It's still early."
The International Maritime Organization, a United Nations affiliate, mandated that marine fuel oil would have a sulfur contract of 0.5% beginning on Jan. 1, 2020, down from the current 3.5%.
Phillips does expect gasoline supply will be affected as vacuum gas oil, a gasoline feedstock, may be blended with fuel oil to meet the new sulfur limit.
"It doesn't look to us as though there's going to be 2 million barrels a day of incremental diesel production to meet that incremental marine fuel market. And some is going to have to come from other products," Dietert said. "But it should take some gasoline out of the gasoline pool," he added.
Phillips 66 expects a new 25,000 bpd isomerization unit at its 260,000 bpd Lake Charles, Louisiana, refinery will reach full production in the third quarter.
Isomerization units convert refining byproducts into feedstocks for motor fuel or petrochemical production. (Reporting by Erwin Seba in Houston and Debroop Roy in Bengaluru; Editing by Dan Grebler and Leslie Adler)
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