News
02/03/26
US midcon refiners to boost heavy crude intake
Houston, 2 March (Argus) — US midcontinent refiners voiced greater optimism in
their fourth-quarter earnings calls, given plans to run more discounted heavy
sour crude and improve pipeline access to new US markets. CVR Energy, which
operates two midcontinent refineries, plans to increase its exposure to Canadian
heavy sour WCS crude, which would allow it to take advantage of wider
differentials as more heavy oil comes on the market, including incremental crude
from Venezuela, chief executive Mark Pytosh says. CVR is boosting WCS
throughputs to about 20,000 b/d at its 132,000 b/d refinery in Coffeyville,
Kansas, up from 1,000 b/d of WCS capacity in 2025. More Venezuelan oil arriving
at the US Gulf coast could pressure Canadian differentials, benefiting the CVR
system, Pytosh says. Fellow US refiner HF Sinclair is working to increase heavy
crude processing at its 162,000 b/d refinery in El Dorado, Kansas. The project,
which is expected to be completed in the fourth quarter, will improve plant
reliability and increase heavy crude processing capability by about 10,000 b/d,
commercial executive vice-president Steven Ledbetter says. HF Sinclair can run
up to 100,000 b/d of heavy crude in its system and is seeking an advantage with
more heavy grades available in the market. The increase in heavy sour Venezuelan
supply earlier this year was "a shock to the system in terms of the
differentials", causing an immediate pop, Ledbetter said. More Venezuelan crude
is hitting the global market after traders Trafigura and Vitol were approved by
the US government to market unsanctioned Venezuelan oil following the US capture
of former president Nicolas Maduro on 3 January. The US has since lifted
sanctions on Venezuelan oil exports. Other US refiners with midcontinent plants,
including Valero, Marathon Petroleum and Phillips 66, also plan to increase
their overall intake of heavy sour supply, including Venezuelan oil. Midstream
moves Midcontinent refiners are optimistic about proposed pipeline projects that
could expand their reach to new US markets. Midstream firm Oneok plans to boost
products pipeline capacity by 35,000 b/d from western Kansas to the greater
Denver area in the third quarter through a new pipeline and pumping station
upgrades, the company says. Oneok has also proposed the 200,000 b/d Sun Belt
Connector products pipeline from El Paso, Texas, to Phoenix, Arizona, with
targeted start-up in 2029. A competing project — the Phillips 66-Kinder Morgan
joint venture Western Gateway system — includes building a 200,000 b/d pipeline
from Borger, Texas, to Phoenix, combined with the reversal of Kinder Morgan's
existing SFPP pipeline from Colton, California, to Phoenix. In addition, the
Phillips 66-operated Gold pipeline, which flows from Borger to St Louis,
Missouri, would be reversed to allow products from midcontinent refineries to
move south to Borger and supply the Western Gateway system. Phillips 66 and
Kinder Morgan on 16 January launched a second open season on the project after
receiving "significant shipper interest" in an initial offering. The companies
also expanded the project to add access to Los Angeles markets. The pipeline
proposals come as two refinery closures in California have raised fuel supply
concerns in the western US. Phillips 66 shut its 139,000 b/d Los Angeles complex
last year and Valero is in the process of idling its 145,000 b/d Benecia
refinery. Valero plans to decide the fate of its other California refinery —
85,000 b/d Wilmington — around the end of the decade. By Eunice Bridges US
midcontinent Canadian crude runs Send comments and request more information at
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