More than a century after the fuel pumping on the banks of the Houston SHIP channel, the oldest refinery in the city is preparing to close it, which is likely to put hundreds of people from work. Her competitors welcome his death.
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(Bloomberg) – more than a century after the fuel disk on the banks of the Houston Sven channel, the oldest refinery in the city is preparing to close it, which is likely to get hundreds of people out of work. Her competitors welcome his death.
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The closure of the factory – which is built by the industrial Harry Senkler in 1918 and is now owned by Lyondellbasell Industries NV, the giant petrochemical – sector struggles that decrease alongside the demand for its central product.
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The consumption of gasoline in the United States has reached its peak five years ago, according to federal data, and the transition to a cleaner energy leads to the erosion of the demand for other fuel as well. This refining industry was transformed into the Darwinian Battle Square, where he survived only.
Lwandil faced intense competition. When the Senkler refinery began working a century ago, the factory was more than just a group of tubes on the swamps of the swamps, and the Houston ship has just opened as a deep port.
Now, the refinery is part of a huge petrochemical corridor and is one of 10 fuel makers in Houston, many of which are huge experts renewed to treat light oil from the pump tank. To survive, Lyandil had to sink a large capital – up to two billion dollars, according to the repeated RBN Energy analysis squad – to improve the aging factory. After the attempt and its failure to sell the refinery, the company announced in 2022 that it would stop operations.
It is not alone. This year, Phillips 66 plans to close WilMington, California, a refinery after the closure of the Hurricane Louisiana Factory in 2021, and many other refineries are weak. This is in addition to nearly a million barrels per day of the ability to refine that it was closed after securing the epidemic that destroys the demand for gasoline.
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But the series of closure lies the reality of today's market: the profit refining is not so bad. According to one of the measures, it is 20 % higher than an average of 10 years. In the wake of the epidemic, when oil prices fell, but the demand for fuel, these profits rose to record levels.
This jump after guardianship is to refine the margins of Lwandil to keep the Houston refinery works for more than two years after announcing the closure. This can as long as safety can work without investing in maintenance and promotions.
Simply put, the refineries do not close because their margins are bad. They do this because it cannot justify the cost of maintenance.
Austin Lyn said: “If you look at capital expenses, one hundred million dollars, I want to pay more than five, 10 or 20 years, this is the place where I may start thinking about the pressure that will be exposed to the decline in the demand for margins.” , North American refining analyst and products in Wood McKinsey.
However, now that the margins have settled at prenatal levels, fuel makers who face lukewarm demand expectations are keen to prevent them from falling.
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Randy Horburone, chief of the London refinery analyst for consulting, said that the closure of Lyandil was “good for the market.”
If the closure occurred a few years ago, it may have soft markets, pushing prices and pushing competitors to increase production quickly to compensate for the shortage.
“Instead, the market that treats closure” with gravel is in a somewhat large lake, not a rock in a small lake, “said John Aires, the administrative director of the Analysis Department in the field of analyzes engraved in the repeated RBN Energy.
The workforce of the factory reflects the dynamics of the transformation of industry. Its employees diminished to about 450 out of 1,200 a few years ago, and most of these workers were appointed after the closure was announced. Marcus Velez, assistant director of United Steel province of Workers 13, said 125 of the current employees of the factory precedes the closure decision and only 80 will remain on the suspension of operations as soon as the operations stopped.
(Lwandel said she would try to put many workers in jobs in her chemical factories.)
Market effects
The greatest impact on energy markets may be fuel. Since the refinery is closed at a time when many plants have stopped production for seasonal maintenance, gasoline and diesel supply will be more strict than usual. Paul Y said. Cheng, an analyst at Scotiaabank, to maintain the balance of the local market when the demand for the spring decreases, exports will decrease to 11 %.
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Lyondellbasell produces average 140,000 barrels per day of gasoline and 100,000 barrels of diesel, while the United States exports about 1.9 million barrels per day of fuel combined.
The filtered competitors are likely to benefit from the closure immediately. Gulf Coast and Middle West plants that import heavy oil will work that the price of this raw decline is the demand for this, according to AUERS. The stagnation in the market can reduce the high prices of the potential US tariffs on Canadian and Mexican oil.
Overlook
More closure on the horizon. Smaller and older refineries without accessing a variety of tools or export markets for their products are increasingly exposed compared to huge plants such as motiva Enverprises' Port Arthur and Exxon Mobil Corp's Beaumont and Marchhon Petroleum Corp's Corp from us to produce fuel.
New regulations on California refineries can also stimulate retirement there. Valero Energy Corp, the largest American recipe, last year, warned that “all options are on the table” for its California plants – echoing the slow demise To run them.
Jason Gables, TD Cowen, said that refineries will reach a “natural decision point” when you expect the cost of continuing to run outside future profits.
Auers said that the refineries are unwilling or unable to absorb the cost to modernize, and they simply find themselves unable to stay competitive. The rest enjoyed “somewhat attractive and sustainable refining margins.”
– With the help of Lucia Casai.
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The post Houston’s Oldest Refinery Is Shutting. It Won’t be the Last. first appeared on Investorempires.com.