|SWith the decline in refining margins and light-heavy price
differentials, the enthusiasm for refinery projects has diminished. That does not mean planned projects will be
cancelled. The decision to
cancel/delay may depend on whether the project belongs to an independent
refinery or an integrated company. It
may also depend on the type of project and its stage of development, or on
refinery location and crude oil sources.
|SAn independent refiner, such as Valero, sees more impact on
cash flow intended for capital expenditures.
Valero has indefinitely suspended their Port Arthur expansion and
delayed the other major project at their St. Charles, Louisiana facility.
|SCanadian oil sands production delays have been occurring,
and production forecasts show less increase in volume over the next five
years or so than had been forecast in the past. The latest Canadian Association of Petroleum
Producers projection is for oil sands production to rise from the 2008 level
of 1.2 million barrels per day to 2 or 2.2 million barrels per day in
2015. There are a number of pipeline
proposals to move the oil sands crude to the Gulf Coast, but it might be 2015
before large volumes could move to that U.S. refining area.
|SMarathon’s Garyville refinery 180-thousand-barrel-per-day
expansion is nearing completion, and Motiva is continuing its 325
thousand-barrel-per-day Port Arthur refinery expansion. Both include heavy oil upgrading
|SMost Midwest refinery projects are tied to using increasing
volume of Canadian oil sands crude oil.
ConocoPhillips joint venture with Encana is moving ahead with the
expansion and bottoms upgrading for heavy oil sands crude, as is BP, which is
converting its Whiting refinery for this feedstock.
|SMarathon’s Detroit refinery, Husky’s Lima facility, and
Husky/BP’s Toledo refinery projects have announced delays that may be
associated with upstream production delays.