May 28, 2020:

Oil futures rose about 2% on Thursday as a steady improvement in U.S. refining activity offset a surprise build in crude and diesel inventories and on worries that China’s new Hong Kong security law could result in trade sanctions. Brent for July rose 55 cents, or 1.6%, to settle at $35.29 a barrel on its second to last day as the front-month. U.S. West Texas Intermediate (WTI) crude rose 90 cents, or 2.7%, to settle at $33.71. That move in U.S. crude narrowed Brent’s premium over WTI to its lowest since mid-April. U.S. crude inventories rose 7.9 million barrels last week, exceeding expectations, due to a big increase in imports from Saudi Arabia, the Energy Information Administration (EIA) said. The EIA’s report, however, also showed refiners boosted output and gasoline stockpiles fell unexpectedly, while crude inventories at the U.S. Cushing storage hub in Oklahoma fell 3.4 million barrels. [EIA/S]

The market initially fell due to the big increase in crude stocks, but switched into positive territory when it saw the drawdown at the Cushing delivery point for WTI, said Bob Yawger, director of energy futures at Mizuho in New York. Oil prices have rebounded in recent weeks on anticipation of improved demand after the coronavirus pandemic sapped worldwide consumption by roughly 30%. Overall investment is dropping and U.S. production cuts are balancing out the supply glut, but demand still has not bounced back entirely. Markets are also concerned Washington could slap trade sanctions on China due to Beijing’s move to impose a new security law on Hong Kong. Uncertainty about Russia’s commitment to continuing deep output cuts kept the rally in check. Saudi Arabia and other OPEC producers are considering an extension of record output cuts until the end of 2020 but have yet to win support from Russia, according to OPEC+ and Russian industry sources. Additional reporting by Laila Kearney in New York, Julia Payne in London, Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Marguerita Choy and David Gregorio.

By Reuters

May 28, 2020:

The petrochemical company that runs Scotland’s Grangemouth oil refinery should not be given state support to help it weather the coronavirus pandemic, according to a coalition of environmental organisations. Petroineos, a joint venture between the multinational chemicals giant Ineos and the Chinese state-owned oil and gas company PetroChina, is seeking an emergency government loan worth up to £500 million, as the petrochemicals complex struggles with a collapse in fuel demand. Speaking to The Times earlier in May, Ineos, which is owned by the UK’s fifth wealthiest individual Jim Ratcliffe, said it was not surprising that the refinery was talking to the government “at a time when demand for fuel has fallen significantly during the period of lockdown”. But green groups, including Greenpeace, Friends of the Earth and numerous anti-fracking campaigns, have written to the hosts of the upcoming UN climate summit COP26, now set to take place in Glasgow next year, demanding that the government refuse support for what they call a “climate hostile business model”. “The COP26 hosts shouldn’t support a climate hostile business model that fuels the proliferation of fracking in Pennsylvania, a state that was already struggling with the impacts of oil, gas and petrochemicals industry pollution,” said Andy Gheorghiu, Policy Advisor for Food & Water Action Europe, which organised the letter.

In the letter to Scottish First Minister Nicola Sturgeon and UK Prime Minister Boris Johnson, the campaigners say Petroineos “contributes systemically through its business model to climate change and an increasing plastic pollution of our environment and oceans”. It accuses Ineos of being the “main driving force” behind the import of gas extracted by US fracking companies to Europe for the purposes of plastic production. The letter also argues that now is the right time for a “Just Transition” to clean jobs, “managed in deep partnership with trade unions, workers and communities”. The fashion designer Vivienne Westwood, who also signed the letter, said: “Every investment in or support for Ineos would directly fuel the climate and plastics crisis, locking in future instability at a time when investment should be prioritised towards creating a secure and sustainable industry”.  Ineos owner Jim Ratcliffe has frequently drawn criticism from environmental campaigners, recently sparking accusations of “greenwashing” for his decision to take over the sponsorship of the UK cycling team, which has run a high-profile campaign against ocean plastic pollution. Last year, Greenpeace’s investigative unit Unearthed revealed the company had threatened to close its Middlesborough manufacturing plant if it wasn’t exempted from EU clean air and water regulations. Neither Petroineos nor the Scottish government responded to requests for comment. The UK Treasury said it could not comment on individual companies.

By desmog.co.uk

May 28, 2020:

Who needs a loss-making, inflexible oil refinery in a world where demand for petroleum has been obliterated? We’re about to find out. When consumption of transport fuels collapsed this year because of coronavirus, much of the industry moved into survival mode, cutting processing rates and even temporarily stopping refining in some cases. While that helped prop up the industry’s margins for a while, a combination of rising crude costs and still-weak end-user demand are starting to bite. With many oil traders and analysts expecting a slow and uncertain recovery in demand, there’s now an open question about where that leaves refineries supplying tens of billions of barrels of fuel each year. It seems likely that many of the weaker plants will be permanently shuttered. “The Covid situation has accelerated the rationalization process that was always coming,” said Spencer Welch, vice president of oil markets and downstream consulting at IHS Markit. “It will hit Europe hardest and first. But it will also hit North America, particularly the East Coast.” The refining industries in Europe and the U.S. have long grappled with overcapacity as bigger, more efficient plants got built in the Middle East and Asia. The expansions mean that plants making fuel in France or Belgium, for example, have found themselves increasingly competing against supplies imported from the likes of India, Saudi Arabia or even as far afield as South Korea. In recent weeks, Asian refineries have enjoyed stronger local demand that’s kept the region’s plants busy, while a recovery in Europe and the U.S. has lagged.

While the refining industry globally has been forced to take capacity offline, the hit has probably been bigger in Europe and the U.S. than in Asia, according to Fitch Ratings. China, in particular, is a relative bright spot -- its refinery runs have recovered, and margins are being helped by a government-set floor in product prices. The combination of a tightening crude market and weak demand is set to keep refining margins at historic lows over the coming months, researcher JBC Energy GmbH said in a note. “In this difficult environment, efforts by the more resilient refiners, not only in Asia, to gain market share may further contribute to pushing out the most vulnerable players, ultimately leading to some pressure relief in the medium to longer term,” JBC said. IHS estimates that Europe could lose about 2 million barrels a day of oil-processing capacity by 2025, roughly equivalent to 13%. And about half of that is attributable to the fallout from the current crisis. But it’s not only Europe. Refiners in Australia and New Zealand are under pressure, while Asia, especially Japan, could also be affected, according to Facts Global Energy.

“Many refiners will limp through the next 1-2 years to see what happens to demand recovery,” said Steve Sawyer, director of refining at FGE. In recent weeks, America’s refiners responded to the downturn by slashing rates to a minimum and idling some gasoline-making units. Marathon Petroleum Corp., the biggest U.S. refiner, temporarily shuttered two of its refineries. The devastation that Covid-19 has wrought on demand “is not over yet,” Tom Nimbley, chief executive officer at PBF Energy Inc., said on a May 15 earnings call, even as U.S. gasoline demand was showing signs of recovery. PBF is running its six refineries at minimum rates. “2020 will be a tough year for the industry, and in particular for refineries with high debt and weak liquidity,” said Dmitry Marinchenko, a senior director at Fitch Ratings, which has taken negative rating actions on Marathon Petroleum, and Turkey’s Turkiye Petrol Rafinerileri AS, or Tupras. The prolonged periods of maintenance known as turnarounds that are required in the industry can easily cost $100 million, according to Sawyer. “The next crunch point for any refiner is when he has to justify significant spend on his refinery,” he said.

In Europe, the most vulnerable refineries are probably the so-called simple plants -- those lacking options for reprocessing what’s left over after the key distillation process in refining, according to IHS. While the initial slump was particularly bad for jet fuel and gasoline, there have been signs of recovery. Diesel has held up better in Europe, but that’s at risk too because jet fuel is being diverted into that product. Weak margins in the industry could last for years, said Jonathan Lamb, an analyst at Wood & Company, an investment bank. He says demand could take a couple of years to recover at best. “In the meantime, capacity continues to increase,” he said. “Hanging on in the hope of better margins is not a smart move.”

By Bloomberg

May 27, 2020:

Contaminated water has been seeping into Sand Creek just up from where it meets the South Platte River near the Suncor Energy oil refinery north of Denver, and company officials on Wednesday said they were monitoring conditions and “will make any necessary repairs” to a spill containment pool behind sandbags where crews were pumping out water. A sheen of benzene and other chemicals was detected on the surface of Sand Creek on May 7 and again on May 15, company officials said. Sunday’s heavy rains raised water levels along the creek, leading to a breach of the containment area. “An investigation is underway to identify the material and understand the potential source,” Suncor spokeswoman Jessica Depencier said in an emailed response to queries from The Denver Post. “We’ve taken a number of steps to progress this work, including excavation of the area, de-watering and collecting soil, surface water and ground water samples. We are also regularly monitoring Sand Creek along the Suncor property line,” Depencier said. Suncor contractors have drawn water samples from Sand Creek and the South Platte, and tested these for benzene, toluene, ethylbenzene, xylene and methyl tertiary butyl ether, company officials said. The results showed concentrations did not exceed state standards for surface water in those waterways, officials said.

Colorado Department of Public Health and Environment officials said they are aware of the sheen and are investigating. “If we determine the release is a hazardous constituent and from Suncor, we will require it to be addressed per the state’s corrective action authority,” agency spokeswoman Laura Dixon said. “We will also evaluate compliance with water quality permits. We are asking Suncor to provide additional data to allow us to do a thorough investigation.” The refinery is located just north of Denver in Commerce City, along the creek and the Sand Creek Greenway public bicycle path, near where the creek flows into the South Platte. “Who is watching this?” Adams County Commissioner Steve O’Dorisio said. “I’m concerned about the problems that continue to occur.” These latest water pollution problems at the refinery are happening amid a continuing partial shutdown due to recent repeated air pollution problems that have raised concerns of state health officials, local leaders and residents. In March, state officials announced a negotiated legal settlement with Suncor for multiple air-pollution violations at the refinery since 2017.

Suncor officials said air monitoring near the refinery along the bike path shows that pollutant concentrations remain below the levels that the U.S. Occupational Safety and Health Administration permits. For years, Suncor operators of the oil refinery have endured groundwater contamination problems that have led to seepage of benzene and other toxic chemicals into water and soil. Full cleanup has been slow. State health inspectors identified a broken “dead leg” pipe beneath a storage tank as a source of previous spills. Suncor capped it in 2011, but liquids that leaked from the pipe into an underground toxic plume still fouled surface water in Sand Creek, which flows into the South Platte. Benzene-contaminated groundwater also has spread in other directions — along the concrete-lined Burlington irrigation ditch and under the adjacent Metro Wastewater Plant and under the bed of Sand Creek. State health officials have said they don’t believe the plume has reached the river directly and that the size of the plume was stable or shrinking. But benzene levels in the past have been elevated, according to state data.

State officials repeatedly have ordered Suncor to make repairs at the refinery, including work around storage tanks. Company contractors have constructed underground clay walls and have removed hundreds of thousands of gallons of liquid hydrocarbons from trenches. Suncor officials have said they’ve looked for other broken pipes. Colorado public health officials have ordered the installation of additional underground clay barriers and groundwater monitoring wells to track toxic plumes, as well as aeration systems that suck benzene vapors from soil. More than 100 aeration wells have been placed between the refinery and the wastewater plant. But extracting benzene from soil has been difficult because this can spread fumes into the air. State air officials have ordered emission controls, including charcoal filters, to minimize air pollution.

By Broomfieldenterprise.com

May 15, 2020:

The European Commission has approved, under EU state aid rules, a Czech measure to support the environmental clean-up of the former OSTRAMO refinery. All industrial activities of the refinery, located in the Czech city of Ostrava, ceased in 1997. Despite the closure and termination of activities of the refinery, the site is still contaminated, in particular by petroleum hydrocarbons which are normally present in crude oil.

The support, with a budget of approximately CZK 600 million (approximately €21m), will take the form of a direct grant to the lessee of the site of the former OSTRAMO refinery, Global Networks s.r.o. The measure is intended to support the decontamination of the soil and the demolition of buildings necessary for the remediation of the contaminated site itself. The Commission assessed the measure under EU state aid rules, in particular the Guidelines on state aid for environmental protection and energy 2014-2020. The Commission found that the measure will protect the health and well-being of citizens from environment-related risks and impact, in line with the European Green Deal. The Commission also found that the aid is limited to the minimum necessary and that the positive effects of the aid on the environment and public health outweigh any potential negative effect brought about by the public intervention. Finally, the Commission concluded that the measure is in line with the “polluter pays principle”. Pursuant to this principle, the costs of measures to deal with pollution should be borne by the company who causes the pollution. Therefore, aid for the decontamination of sites can be granted only if the beneficiary company is not responsible for the pollution. In this case, the Commission concluded that the aid beneficiary is not responsible for the contamination. On this basis, the Commission approved the measure under EU state aid rules. More information will be available on the Commission’s competition website in the public case register under the case number SA.55522 once any confidentiality issues have been resolved.

By www.eureporter.co