At least three US Gulf refineries have been making higher sulphur petroleum coke than usual in recent months, as a result of crude slate changes.
Sulphur content in coke has increased recently at ExxonMobil's 584,000 b/d Baytown, Texas, refinery; Total's 200,000 b/d Port Arthur, Texas, refinery; and Pemex's 340,000 b/d Deer Park, Texas, refinery, according to sources. This is a result of the facilities running higher volumes of US Gulf Mars crude, Canadian heavy crude, Mexican Maya crude and Saudi Arabian heavy crudes.
With refining utilisation rates recently hitting their highest levels since 2019 — around 94pc — the switch to more traditional heavy sour crudes is leading to an increase in coke production volume. At least one refinery is making the most coke it has ever made, according to a source.
This is in contrast to last year, when refinery utilisation picked up to over 90pc, but high-sulphur petroleum coke production remained stubbornly low, as cokers ran hard but were using lighter feedstock. That resulted in lower-than-normal production volumes and a shift to mid-sulphur quality rather than the more typical high-sulphur.
The higher sulphur coke output could weigh on pricing for the benchmark 6.5pc sulphur grade on the Gulf coast, with more supply of this quality available, and could also reduce volumes of medium-sulphur grades.
One reason for the move to heavy sour crude is the US government's decision in late March to release 1mn b/d of crude from the US Strategic Petroleum Reserve (SPR) over six months, the largest-ever global release of crude reserves. President Joe Biden's administration called the move a "war-time bridge" to help ease high gasoline prices caused by reduced supply from Russia following its invasion of Ukraine. From 1 April through 3 June, the Energy Department released over 45mn bl of crude from the SPR, according to the most recent data from the US Energy Information Administration (EIA).
The SPR crude is heavier, with higher sulphur content than shale oil and other domestic crudes refiners had previously been using. The Bayou Choctaw SPR site in Louisiana contains crude with 31.9⁰API gravity and 1.43pc sulphur, while the Bryan Mound SPR site in Texas contains crude with 33.3⁰API gravity and 1.4pc sulphur content. The US is also selling sweet crude from the West Hackberry and Big Hill SPR sites in Louisiana and Texas.
The unprecedented volume of SPR release has led to softer heavy sour prices in the Houston area in general. This contributed to more purchases of crudes like Western Canadian Select, which produces higher volumes of high-sulphur fuel-grade coke. A record 530,000 b/d of Canadian crude flowed to Texas during the first quarter this year, according to EIA.
While the infusion of heavy sour SPR crude is a temporary factor, some other crude slate shifts could be underpinned by longer term trends.
Deer Park, in particular, is likely using more Mexican Maya coke, after Mexico's state-owned Pemex acquired full ownership of the refinery. The ownership change prompted Pemex to commit to supplying more of its own crude to the facility. Deer Park is also said to be using more heavy sour Saudi Arabian crude.
Strong diesel crack spreads on the back of high prices to export to the European market are also encouraging US Gulf refineries to use heavier crudes, producing more high-sulphur fuel-grade coke, a market participant said.
