Heavy turnaround work in the US Gulf coast should relieve very high gasoline inventories that curbed summer profits, Marathon Petroleum said today.
An estimated 700,000 bl to 1mn bl of regional turnaround work should help to bring down US Gulf coast gasoline inventories that were 10pc higher than the 10-year average last week, chief executive Gary Heminger said during a quarterly earnings call.
"I believe the refining industry has shown pretty good resolve in the past that there's no need to be running inventories up that are going to cause a degradation on margins into the future," Heminger said.
Unseasonably high gasoline inventories nationwide sapped the enthusiasm of higher implied gasoline demand over the summer and helped sink refining margins in the second quarter.
The US independent refiner considered distillate stockpiles in the US Gulf coast and midcontinent where it operates to be at roughly normal levels. Midcontinent gasoline inventories were also close to year-ago levels, but US Gulf coast volumes last week were 6.5mn bl higher than the same week last year, according to the Energy Information Administration.
Volumes of reformulated blendstocks in the region were 2.6mn bl higher than last year, and naphthas, alkylates and other blendstocks were 2.7mn bl higher over the same period.
The overhang has led to market discussion of refiners switching to stockpiling butane and producing cheaper, winter-grade gasoline well ahead of its legal sell date in late September.
But Marathon Petroleum continued to produce summer-grade gasoline, senior vice president of refining Raymond Brooks said. The refiner instead tilted production toward diesel.
Marathon Petroleum crude throughputs in the US Gulf coast will fall 4pc in the third quarter compared to the same period of 2015 because of increased turnaround work. The refiner disclosed planned maintenance activity at its 475,000 b/d Galveston Bay refinery in Texas City, Texas.
The company reported an $801mn profit for the quarter, down by 5pc from the same quarter last year but up from $1mn in the first quarter of 2016.
| Marathon Petroleum throughput estimates | ||
| 3Q 16 estimate | 3Q 15 actual | |
| Crude throughputs by region ('000 b/d) | ||
| US Gulf coast | 1,025 | 1,072 |
| US midcontinent | 700 | 672 |
| Total | 1,725 | 1,744 |
| Marathon Petroleum | ||
| Marathon Petroleum 2Q results | |||||
| 2Q16 | 2Q15 | %± | 1Q16 | %± | |
| Refining throughput '000 b/d | |||||
| US Gulf coast | 991 | 1,031 | -4% | 1,043 | -5% |
| Midcontinent | 612 | 641 | -5% | 595 | 3% |
| Quarterly profit (mn) | |||||
| Consolidated | -5% | 100% | |||
| — Marathon Petroleum | |||||
