The ongoing conflict between the U.S. and Iran and the near-total closure of the Strait of Hormuz isn’t just stranding significant volumes of refined products in the Persian Gulf. It’s also resulting in potentially extensive and long-lasting damage to some refineries there and trapping crude oil that Asian refiners depend on.
Despite ongoing efforts by Pemex to boost production of gasoline, diesel and jet fuel, the Mexican market still depends on imports from the U.S. for just over half of its refined product needs. And moving nearly 700 Mb/d of transportation fuels to population centers south of the border is no easy task.
U.S. exports of gasoline, diesel and jet fuel to Mexico have been mostly rising the past 15 years. Over that same period, the Mexican government’s policy on the import-related roles of state-owned Pemex and private companies has zigged and zagged, slowing efforts to develop new midstream infrastructure.
Crude oil exports are hitting record volumes. Geopolitical dislocations, regional capacity constraints, and transport cost aberrations are upending global trade flows. These developments have a direct impact on U.S. export grades, prices, and the utilization of pipelines and terminals. Petroleum product exports have an equally formidable set of challenges. U.S. surpluses of refined products are growing as domestic demand falls and biofuel penetration increases. The impact will translate directly into shifts in flows between PADDs, the repurposing of infrastructure, and more exports from the Gulf Coast. We’ll be exploring these and many more developments at our upcoming conference, xPortCon-Oil 2023, to be held in Houston on June 8, 2023. In this blatantly advertorial blog, we will introduce the major topics to be covered at the conference, who will be participating, and why we believe this will be the most important industry gathering for crude and products markets this year.
The cost of gasoline has garnered a lot of headlines since the start of 2022, with the blame for elevated prices falling on seemingly everything and everyone, from the Biden administration’s policies on oil exploration to Russia’s invasion of Ukraine, as well as decisions by major U.S. producers and OPEC not to swiftly boost oil production. Another can't-be-ignored culprit is the loss of significant U.S. refining capacity over the last few years, which has limited the ability of refiners to respond to the strong, post-COVID demand recovery by ramping up production. By and large, the refineries still operating have been running flat out. In today’s RBN blog, we look at the state of global refining, where new capacity is likely to be built, and the headwinds to future investment.
U.S. gasoline and diesel prices have been sliding the past couple of months, but there's still a lot of angst among politicians and the general public about the cost of motor fuels — and who's to say prices at the pump won't soar again, spurring another round of proposed "fixes" to the markets for crude oil and refined products. Among the proposals floated when prices spiked this spring were bans on the export of U.S.-sourced crude, gasoline and diesel, the idea being that suspending exports would increase the supply available to domestic markets and thus bring down prices. If only it were all so simple! In today's RBN blog, we discuss the complicated ins and outs of oil, gasoline and diesel imports and exports, and the many effects of putting the kibosh on shipments to international markets.
Mexican demand for U.S.-sourced refined products continues to increase, but Mexico lacks the infrastructure required to efficiently import, store and distribute large volumes of gasoline and diesel. That has spurred the rapid build-out of new port and rail terminals, new pipelines and new storage capacity on both sides of the U.S.-Mexico border. At the same time, Mexico’s state-owned energy companies are gradually opening access to their existing refined-products pipeline and storage networks — which helps a little, but not enough. Today, we discuss the latest round of midstream projects tied to U.S. exports of motor and jet fuels to its southern neighbor.
ExxonMobil earlier this month told analysts in New York that the company expects to add a total of 400 Mb/d of capacity to its three giant Gulf Coast refineries by 2025. Exxon plans to upgrade existing refineries in Houston (Baytown) and Baton Rouge, LA, to increase production of higher-value products and to add a new crude distillation unit to its 362-Mb/d Beaumont, TX, plant after 2020. A final investment decision on the Beaumont expansion — which reportedly would double the refinery’s throughput capacity and make it the largest refinery in the U.S. — is expected later this year and follows a $6 billion investment by Exxon to triple crude output from its Permian Basin production assets in West Texas. Today, we discuss the existing Beaumont operation, its feedstock sources, and the refined-product demand that supports the plant’s expansion.
Increased refined product exports from US Gulf refineries are being driven by diesel refining margins but a lot of by-product gasoline is being produced as a result. Domestic demand for diesel and gasoline has declined over the past 5 years. Fortunately for refiners there is strong demand for diesel and gasoline in Latin America as well as for diesel in Europe. Important cost advantages stemming from the shale revolution are helping Gulf Coast refiners secure these markets against international competitors. Today we conclude our analysis of booming Gulf Coast exports.
