sunoco

U.S. fuel supplier Sunoco announced in May that it has inked a US$9.1-billion agreement to buy Canada-based Parkland Corp., a move that would create the Americas’ largest independent fuel distributor. Sunoco would gain control of Parkland’s fleet of fueling stations and its valuable Burnaby refinery near Vancouver, BC. The deal is supported by Parkland’s largest shareholder and is slated to be voted on June 24. In today’s RBN blog, we’ll discuss this deal and what it means for Canada’s only West Coast refiner.

A lot of energy-industry M&A activity lately has been focused on the acquiring company gaining scale in a shale play or region where it’s already very active, usually the Permian. The latest multibillion-dollar deal in the energy space is different: Sunoco LP (stock ticker symbol SUN), which is primarily involved in fuel distribution east of the Mississippi and in Texas, is buying NuStar Energy (ticker NS), a midstream company with a mix of pipelines (crude oil, products and ammonia) and terminals, most of them within the U.S.’s midsection. As we discuss in today’s RBN blog, the combined company will have a massive footprint, with all kinds of opportunities for synergies and growth. 

Most of the gasoline, diesel, heating oil and jet fuel consumed in the U.S. East Coast region is piped in via long-distance pipelines from Gulf Coast refineries, but substantial amounts are moved in by ship—either from the Gulf Coast by Jones Act vessels or from overseas. These shipped-in volumes then need to make their way from port to consumer. Today we continue our examination of how transportation fuels and heating oil are delivered to East Coast users with a look at the ports and connecting pipelines that help move these critically important fuels.

The Permian Basin has been producing oil in West Texas since the 1920’s. The principal route to market for Permian crude has been via Cushing, OK to Midwest refineries. After declining in the 1980’s Permian production is increasing again – reaching an estimated 1.3 MMB/d (September 2012 Bentek). The existing pipeline infrastructure means the majority of that crude still finds its way to Cushing and the Midwest. There Permian producers face the same congestion and price discounts that Canadian and Bakken producers have suffered. Today we review current Permian Basin routes to market.

Just when we thought that East Coast refining had become an oil company’s equivalent of musical chairs and all the players were headed for the exits, a consortium including Carlyle, original owners Sunoco, and JP Morgan strung together a deal to save the 330MB/d Philadelphia refinery that had been slated for the scrap heap. Can the new consortium succeed? How will they overcome the obstacles that chased the previous owners off the lot? Today we look at why they just might succeed.

Crude prices closed yesterday at $81.90/Bbl - an 8 month low. Gasoline and heating oil also posted 2012 lows. These falling prices come on the heels of a tough year for East Coast refiners that saw more than 25 percent of refining capacity shut down. Of the remaining capacity, nearly a third - at the Sunoco Philadelphia refinery is due to close in July. Why are East Coast refiners running for the exits? How will the region secure refined product supplies without refineries?  In “Don’t Let The Sun Go Down On Me - East Coast Refining Part I”, we look at why crude economics aren’t working in the region and the impact that refinery closures will have on gasoline supplies.