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Biofuels decisions, costs piling up for new EPA chief

  • Market: Biofuels, Crude oil, Oil products
  • 11/03/21

Record compliance costs driven by urgent and overdue fuel policy decisions will press newly confirmed US Environmental Protection Agency administrator Michael Regan from the first day on the job.

Pending decisions on how much renewable fuel to require refiners and importers to blend into the US transportation supply have helped drive costs associated with federal fuel blending mandates under the Renewable Fuel Standard (RFS)to their highest levels in the history of the program.

The former top environmental regulator of North Carolina, a state without any tilt toward refining or agribusiness-based biofuels, must give both those industries clarity on what — if any — adjustments the new administration will make to those requirements following a year of depressed global fuel demand.

Regan last month promised a Senate confirmation hearing that the agency would be transparent in its decisions. But the administrator did not pledge haste, noting the number of renewable fuels needs under litigation and market scrutiny.

"What I can promise you is we will take a no-surprise approach," Regan told the Senate Environmental and Public Works Committee.

EPA must set overdue minimum renewable fuel blending requirements for 2021, and by December set those requirements for 2022. The agency must also by December set blending requirements for 2023 as EPA for the first year takes greater authority over the RFS without specific Congressional targets.

And EPA remains dogged by past decisions and deferrals. Governors asked that the agency waive blending requirements for 2020 in light of the steep drop in fuel demand forced by global movement restrictions to limit the spread of Covid-19. Legal challenges to the former administration's use of mandate waivers for refineries processing less than 75,000 b/d of crude a year now stretch all the way to the US Supreme Court. EPA remains under court orders to find some way to add 500mn USG of blending requirements reduced in 2016 back into a future mandate. And a host of proposed advanced biofuels still wait for approval.

Costs to comply with the RFS have climbed over the past 13 months to surpass 16¢/USG, based on Argus assessments. That cost represents the price of the various credits needed to comply with the federal program for every gallon of gasoline and diesel added to the US road fuel supply. Those costs started last year at about 2.6¢/USG.

Regan may have little history with biofuels regulation, but President Joe Biden's administration also brings back prominent officials very familiar to program participants. Janet McCabe, nominated as deputy EPA administrator, from 2013 to 2017 was acting assistant administrator for EPA's Office of Air and Radiation — the office directly responsible for administering RFS. Gina McCarthy, former president Barack Obama's EPA administrator during that period, is Biden's national climate advisor.


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04/07/24

Saudi Aramco cuts official August crude prices for Asia

Saudi Aramco cuts official August crude prices for Asia

London, 4 July (Argus) — Saudi Arabia's state-controlled Saudi Aramco has reduced the official formula prices of August-loading crude exports for buyers in its core Asia-Pacific market, while increasing prices for European customers. For customers in Asia-Pacific, Aramco has cut the August formula prices of its Arab Light and Extra Light grades by 60¢/bl compared with July and reduced the prices of its other grades by 20-70¢/bl. The price cuts for Asia-Pacific are within customers' expectations. Refiners in the region expected a narrower Dubai backwardation to prompt a reduction in Saudi formula prices . The month-on-month change in Dubai intermonth spreads is one factor that producers such as Aramco consider when setting the formula prices for their Asia-bound cargoes. For customers in northwest Europe, Aramco has raised the official August prices of its Extra Light, Arab Light, Arab Medium and Arab Heavy grades by 90¢/bl. For Mediterranean-bound exports of the same grades, it increased prices by 90¢/bl on a fob Ras Tanura basis and by 80¢/bl a fob Sidi Kerir basis. European refiners were anticipating an increase in Saudi formula prices on the back of firm values for rival crudes and tighter global supply. The North Sea's largest crude grade, Norway's medium sour Johan Sverdrup, averaged $1.60/bl above the North Sea Dated benchmark fob Mongstad in June, up from a $0.29/bl premium in May. Values of heavier grades in Europe have recently begun to improve. The Argus Brent Sour Index, which prices northwest Europe's heavier and sourer crudes, has averaged a 35¢/bl premium to Dated so far this week. The index averaged 10¢/bl above Dated in June and 7¢/bl below the benchmark in May. Aramco is expected to export less crude in the summer months when domestic demand peaks. Saudi Arabia announced in early June that it will extend a 1mn b/d "voluntary" additional crude output cut — first implemented in July 2023 — for three months until the end of September. For customers in the US, Aramco has lifted the August formula prices of Extra Light and Arab Light by 10¢/bl compared with July. It has left formula prices of the other grades unchanged. By Edmundo Alfaro and Lina Bulyk Saudi Aramco official formula prices $/bl August July ± United States (vs ASCI) Extra Light 7.10 7.00 0.10 Arab Light 4.85 4.75 0.10 Arab Medium 5.45 5.45 0.00 Arab Heavy 5.10 5.10 0.00 Northwest Europe (vs Ice Brent) Extra Light 5.60 4.70 0.90 Arab Light 4.00 3.10 0.90 Arab Medium 3.20 2.30 0.90 Arab Heavy 0.80 -0.10 0.90 Asia-Pacific (vs Oman/Dubai) Super Light 2.75 2.95 -0.20 Extra Light 1.60 2.20 -0.60 Arab Light 1.80 2.40 -0.60 Arab Medium 1.25 1.95 -0.70 Arab Heavy 0.50 1.20 -0.70 Mediterranean fob Ras Tanura (vs Ice Brent) Extra Light 5.60 4.70 0.90 Arab Light 3.90 3.00 0.90 Arab Medium 3.30 2.40 0.90 Arab Heavy 0.60 -0.30 0.90 Mediterranean fob Sidi Kerir (vs Ice Brent) Extra Light 5.65 4.85 0.80 Arab Light 3.95 3.15 0.80 Arab Medium 3.35 2.55 0.80 Arab Heavy 0.65 -0.15 0.80 Source: Saudi Aramco Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Hengyuan's Malaysian refinery completes LRCCU repairs


04/07/24
News
04/07/24

Hengyuan's Malaysian refinery completes LRCCU repairs

Singapore, 4 July (Argus) — China-based independent Hengyuan Refining (HRC) has completed repairs at the long residue catalytic cracking unit (LRCCU) at its Malaysian 156,000 b/d Port Dickson refinery on 30 June. The LRCCU was shut after a leakage at a carbon monoxide boiler on 19 June. It is a gasoline production unit and typically uses residual fuel as a feedstock to produce full-range catalytic cracked gasoline (CCG). Inspection activities for HRC's hydrogen manufacturing unit and Euro4Mogas facilities were also complete. The refinery has restarted the units and is "recovering to its normal operational level", said HRC. The LRCCU issue had prompted HRC to offer rare and prompt straight-run fuel oil cargoes, and buy gasoline cargoes for June and July loading. The Port Dickson refinery houses two crude distillation units, a LRCCU, two naphtha treaters, a merox plan, two reformers and a gasoil treatment plant. Approximately 85pc of its oil products are sold domestically in Malaysia. By Aldric Chew Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Upper Mississippi locks closed by high water


03/07/24
News
03/07/24

Upper Mississippi locks closed by high water

Houston, 3 July (Argus) — High water levels on the upper Mississippi River have caused several lock closures and spurred delays for barge carriers. Lock and Dams (L&D) 12, 16 and 17 on the upper Mississippi River closed 2 July and are expected to remain closed through the rest of this week and possibly into the next, according to the US Army Corps of Engineers. Locks 11, 13, 18 and 20 are expected to close on 4 July. The Corps will likely close locks 14 and 22 on 5 July, while lock 15 is expected to close 6 July. The Corps said the duration of the July 4-5 closures is unclear. Another 2-5 inches of rain fell along the western Corn Belt in the past week, according to the National Oceanic and Atmospheric Administration. High river conditions led to major flood status at Dubuque, Iowa, while other locations along the river are at moderate flooding levels. Water levels are 4-5ft below record highs on the upper Mississippi River. The outdraft at lock and dam 16 was at 211,444 cubic feet per second (cfs) on Tuesday, compared with typical flow of 41,100cfs. Major barge carrier American Commercial Barge Line anticipates 7-10 days of disruption followed by a 2-3 week catch-up. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US services contract in June, signal broad weakening


03/07/24
News
03/07/24

US services contract in June, signal broad weakening

Houston, 3 July (Argus) — Economic activity in the US services sector contracted in June by the most since 2020 while a report earlier this week showed contraction in manufacturing, signaling a broad-based slowdown in the economy as the second quarter came to an end. The Institute for Supply Management's (ISM) services purchasing managers index (PMI) registered 48.8 in June, down from 53.8 in May. Readings above 50 signal expansion, while those below 50 signal contraction for the services economy. The June services PMI "indicates the overall economy is contracting for the first time in 17 months," ISM said. "The decrease in the composite index in June is a result of notably lower business activity, a contraction in new orders for the second time since May 2020 and continued contraction in employment." The business activity/production index fell to 49.6 from 61.2. New orders fell by 6.8 points to 47.3. Employment fell by 1 point to 46.1. Monthly PMI reports can be volatile, but a services PMI above 49 over time generally indicates an expansion of the overall economy. "Survey respondents report that in general, business is flat or lower, and although inflation is easing, some commodities have significantly higher costs," ISM said. The prices index fell by 1.8 points to 56.3, showing slowing but robust price gains. ISM's manufacturing PMI fell to 48.5 in June from 48.7 in May, ISM reported on 1 July. It was the third consecutive month of contraction and marked a 19th month of contraction in the past 20 months. Wednesday's weaker than expected ISM report, together with a Wednesday report showing initial jobless claims last week rose to their highest in two years, slightly increase the odds that the Federal Reserve may lower its target rate later this year after maintaining it at 23-year highs since last year in an effort to stem inflation. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Mexico economy showing 'timid growth': IMEF


03/07/24
News
03/07/24

Mexico economy showing 'timid growth': IMEF

Mexico City, 3 July (Argus) — Indicators of Mexico's non-manufacturing and manufacturing sectors suggested the economy recovered "some dynamism" in June, while maintaining the slow pace of growth of the second quarter, according to domestic financial association IMEF. "The trend suggested by the IMEF indicators suggest a moderate growth for the second quarter of the year," IMEF said. "The economy finds itself in an evident pause compared with the solid dynamism observed during 2022 and a large part of 2023." Manufacturing "stagnated" in the second quarter, it said. "It is very probable that economic activity will undergo additional slowdown in the second half of the year that will extend into 2025." IMEF's June manufacturing purchasing managers index (PMI) increased by 0.4 points to 49.5 points, still beneath the 50-point breakeven that shows contraction. This has been the third consecutive month of contraction. PMI adjusted to compensate for variations in company size was more positive, growing by 0.8 points to 51.2 in June, the group said. Manufacturing accounts for about a fifth of the Mexican economy. The non-manufacturing PMI, which covers the lion's share of the economy, rose by 0.6 points to 51 in June, marking a 29th month of expansion, IMEF said. Adjusted for company size, the headline services PMI rose by 0.9 to 5.18. Economic activity in Mexico continues to surprise downwards. After growth came in at an annual 1.6pc in the first quarter from a year earlier, the first data for April showed a monthly contraction of 0.6pc, IMEF said. Headwinds and tailwinds IMEF representatives highlighted growing market uncertainty following the Mexican election and ahead of the US presidential election in November. On the upside, said IMEF, Mexico should benefit from continued strength in the US economy, adding the incoming administration looks to bring down the current fiscal deficit, which is equal to 5.9pc of GDP. It will not reach the government's 3pc target for the budget coming out in November, but progress is expected with next year's budget and moving forward. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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