Pollution Rule Is Boon for Richest Refiners, Blow for Weakest
07 Novembre 2017 - 5:08PM
Dow Jones News
By Christopher M. Matthews and Christopher Alessi
The refining industry is facing its biggest disruption in years
from a looming international air-pollution regulation aimed at
slashing the amount of sulfur in marine fuel for oceangoing
ships.
The regulation doesn't go into effect until 2020, but its
reverberations are already being felt. Analysts predict it will
widen the gap between the refining world's winners and losers,
making some richer while pushing others to the brink.
Some larger companies, including ExxonMobil Corp., Total SA and
Repsol SA have invested billions in recent years to upgrade
refineries, which will allow them to produce more lower-sulfur fuel
and other products. They say they are prepared for the regulations,
which are set by the International Maritime Organization and meant
to reduce emissions that health officials blame for respiratory and
heart diseases.
Some smaller companies, including Philadelphia Energy Solutions,
the largest refinery on the U.S. East Coast, haven't yet begun to
make the costly improvements.
"It's the biggest change to hit the industry in a while," said
Clint Follette of Boston Consulting Group. "At this point, it's too
late for most companies to put in those kinds of investments before
2020."
The International Maritime Organization, the United Nations'
shipping regulator, last year mandated that oceangoing vessels cut
the sulfur content in their fuel by more than 85% starting in 2020.
The world's 50,000 merchant ships can either undergo costly
retrofits to their exhaust systems, or use cleaner fuels such as
low-sulfur diesel.
Most large ships now use what is known as bunker fuel, a thick,
sulfurous type of fuel that is often composed of residual oils, or
the leftovers after diesel and gasoline have been separated from
crude oil through refining.
Shipping companies are expected to opt for cleaner fuels, which
will shrink the market for bunker fuel. Shippers consume as much as
4 million barrels a day of bunker fuel, and the regulation could
cut demand by as much as half, analysts say.
That is bad news for simpler refineries in Europe and the U.S.
East Coast that aren't able to process the dregs of the barrel into
more valuable fuels and which will be stuck with a glut of
high-sulfur fuel leftovers they will be forced to sell at huge
discount, Mr. Follette said.
It is good news for the U.S. Gulf Coast, already the moneymaking
center of the American refining industry. Many refineries there are
more complex, meaning that they have technology that can take heavy
and sour crude and turn it into more profitable, light products, in
addition to bunker fuel.
Companies including ExxonMobil, Chevron Corp., Marathon
Petroleum Corp. and Valero Energy Corp. have some of the nation's
most complex refineries, according to Stratas Advisors global
refinery rankings.
In addition to its existing assets on the Gulf, Exxon, in
anticipation of the new rules, is investing more than $1 billion in
new equipment that will be able to produce lower-sulfur fuels at a
refinery in Antwerp, Belgium.
Others in Europe are also investing. Total has invested $1.31
billion at its refinery complex in Antwerp to increase its diesel
capabilities and cut heavy- oil production.
Dario Scaffardi, executive vice president at Saras, said "small
and unsophisticated" refiners will "all have a problem" in 2020,
because "high sulfur fuel oil will be a product without a
home."
The change comes at a bad time for the beleaguered East Coast
refining sector, where many refineries have shut down in recent
years.
Philadelphia Energy Solutions, a joint venture of private-equity
firm Carlyle Group LP and Sunoco Inc., is one of the least complex
major refineries in the U.S., according to Stratas Advisors.
The facility processes 335,000 barrels a day and primarily makes
gasoline. It is already mired in debt, due to higher costs to
secure crude on the East Coast than elsewhere in the U.S.,
declining gasoline consumption and millions it had to spend to
comply with earlier regulations to blend ethanol into their
fuels.
The company played down the impact of the new rule, saying the
U.S. is producing more of oil it uses -- a less sulfurous, sweeter
crude -- which will dampen the impact of the reduced market for
bunker fuel and make it less expensive for the company to make
cleaner fuels.
"The IMO 2020 regulation will create new demand for diesel until
the shipping industry adapts to the new regulation," it said in a
statement.
Write to Christopher M. Matthews at christopher.matthews@wsj.com
and Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
November 07, 2017 10:53 ET (15:53 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Exxon Mobil (NYSE:XOM)
Graphique Historique de l'Action
De Août 2024 à Sept 2024
Exxon Mobil (NYSE:XOM)
Graphique Historique de l'Action
De Sept 2023 à Sept 2024