LyondellBasell will stop operations at its 268,000 b/d Houston refinery in Texas by 2024 unless it can find a buyer for the facility, amid lofty decarbonization goals and an uncertain outlook for key crude grades.
The company disclosed last year that it was looking to sell its Houston complex as part of a strategic focus on the core petrochemicals business, suggesting the site would hold more value as part of a larger refining system. But the facility now is slated to shut down by 31 December 2023 if no buyer emerges.
The company is evaluating other uses for the site in view of its goal to reach net zero emissions by 2050. LyondellBasell, which is based in the Netherlands and run from Houston, aims to produce 2mn metric tonnes/yr of recycled or renewable-based polymers by 2030.
"While this was a difficult decision, our exit of the refining business advances the company's decarbonization goals," LyondellBasell interim chief executive officer Ken Lane said. "The site's prime location gives us more options for advancing our future strategic objectives, including circularity."
The decision comes at a unique time, as the Houston refinery is on the heels of two consecutive profitable quarters and refining economics in the surrounding US Gulf coast are robust. Rebounding demand for road fuels brought the refinery's benchmark Maya 2-1-1 crack spread to a $20.87/bl average across 2021, from a historically low $12.63/bl average in 2020 and $17.58/bl in 2019.
But crude supply concerns may have affected the facility's economic outlook.
The refinery is designed to process heavy, high-sulfur crude grades. The 700-acre facility is a mainstay taker of Mexican crudes, importing 5.6mn bl from Mexico in August-October last year, third most among facilities in the US in that period, according to data from the US government. But Mexico last year declared a goal to halt crude exports in 2023, and US sanctions against Russian oil have further muddied the outlook for sour heavy crude supply in the US Gulf coast.
LyondellBasell did not respond to a request for comment as to the facility's condition or other factors in a potential sale. The company recorded a $624mn impairment charge against the Houston refinery in its fourth quarter 2021 results for undisclosed reasons.
Houston is one of two US refineries publicly disclosed as up for sale, alongside Marathon Petroleum's 63,000 b/d Kenai refinery in Alaska. Some in the industry expressed skepticism last year that either facility was ripe for a bid, with CVR Energy chief executive David Lamp saying in November that Houston and Kenai "should be on the block or should be shut down."
LyondellBasell has owned the century-old facility located along the Houston Ship Channel since 2006, when it bought out former joint venture partner Citgo.
LyondellBasell will report first quarter 2022 results on 29 April.
