PBF to run under 20,000 b/d of TMX in 4Q

: Crude oil
24/10/31

US independent refiner PBF processed 20,000 b/d of Canadian crude from the expanded Trans Mountain (TMX) pipeline in the third quarter but expects to run less than that in the fourth quarter, the company said on an earnings call today.

The company can run up to 50,000 b/d of the heavy crude grade from western Canada at its Torrance and Martinez refineries in California, which have a combined 316,000 b/d of capacity.

A higher relative price for the TMX barrels driven by Asian demand and ongoing maintenance on equipment used to remove impurities from heavier crude grades at one of its refineries has led PBF to run less of the Canadian oil.

Longer-term, PBF expects California refineries to run "significantly" more barrels from TMX as they have the lowest logistical cost to transport.

By Nathan Risser

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

24/10/31

TMX adds to ‘pulse’ of 4Q freight market: Teekay

Houston, 31 October (Argus) — An increase in monthly Aframax crude tanker loadings in Vancouver, British Columbia, is poised to add a new dynamic to the tanker market this winter, Teekay Tankers chief executive Kenneth Hvid said. So far, tanker rates in the fourth quarter, often the strongest time of year for the market, have lagged the trajectory of fourth quarter 2023. But it is too early in the quarter to assume a rally will not happen, Hvid said. "It feels like the market has called the winter over before it started," he said. "But there is absolutely a pulse in the markets." Part of the support for tanker rates likely will come from heightened demand on Canada's Pacific coast, where exports in Vancouver are continuing to rise following the Trans Mountain Expansion (TMX). In October, 24 Aframaxes loaded in Vancouver, Hvid said. That marks a new high since TMX began operations in May, with the monthly average at around 20 loadings from June through September, according to Teekay. Nine of the 24 cargoes went directly to Asia-Pacific ports and at least four went to the Pacific Area Lightering zone (PAL), where the vessels discharged onto very large crude carriers (VLCCs) for shipment across the Pacific. An increase in direct shipments from Vancouver to Asia-Pacific can clear out available tonnage on the west coast of North America and pressure rates higher, which lifted rates in September . Teekay profits down on year Teekay reported a profit of $58.8mn in the third quarter, down from $81.4mn in the third quarter of 2023, with rates under pressure from lower Chinese crude oil imports. The tanker company expects rates to climb in the fourth quarter on seasonally higher oil demand. Teekay has a fleet of 42 tankers, including 24 Suezmaxes and 18 Aframax/long range 2 tankers, with six additional vessels on time charter. By Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

CNRL 3Q oil and gas output dips

24/10/31

CNRL 3Q oil and gas output dips

Calgary, 31 October (Argus) — Canadian Natural Resources' (CNRL) crude, natural gas and natural gas liquids (NGL) output decreased by 2.2pc in the third quarter. The Calgary-based integrated oil and gas company produced 1.36mn b/d of oil equivalent (boe/d) during the third quarter, down slightly from 1.39mn boe/d in the same quarter last year, the company said Thursday. CNRL's upgraders produced 498,000 b/d of synthetic crude, up from 491,000 b/d in the same quarter last year as the Athabasca Oil Sands Project's (AOSP) Scotford upgrader produced stronger than expected volumes and completed a planned turnaround nine days ahead of schedule. The impact of planned turnarounds to CNRL's annual synthetic crude output was reduced to 5,400 b/d, down from the company's initial forecast of 11,000 b/d. The company also acquired Chevron's Canadian oil sands and Duvernay shale production for $6.5bn in the quarter, increasing CNRL's annual synthetic crude production by 62,500 b/d and its stake in AOSP to 90pc. Bitumen production at CNRL's thermal in-situ projects was 272,000 b/d, up from 269,000 b/d in the same quarter of 2023 as output at Jackfish reached 128,000 b/d, a new quarterly record. The company's crude and NGL output, excluding thermal in-situ, was 228,000 b/d, down from 232,000 b/d in the same quarter last year. CNRL will also increase its committed capacity on the 590,000 b/d Trans Mountain Expansion (TMX) by 75,000 b/d to 169,000 b/d, allowing the company to secure almost one third of the line's committed capacity after PetroChina Canada offloaded its capacity on 10 October. The newly expanded pipeline has provided Canadian producers with more meaningful access to global buyers, reducing Canadian heavy crude price volatility and adding significant egress capacity out of Alberta. Yet, it is uncertain how long unconstrained egress in Alberta can be sustained with oil sands production expected to grow. "It certainly helps secure those barrels which would otherwise be potentially in an egress constrained situation," said CNRL president Scott Stauth on Thursday, adding stronger pricing is now possible by aiming volumes at California or Asia. CNRL posted a profit of C$2.27bn ($1.63bn) in the quarter, down from a C$2.34bn profit during the third quarter of 2023. By Kyle Tsang Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

China trade tensions could cloud climate summit

24/10/31

China trade tensions could cloud climate summit

China argues that its industrial emissions are needed to provide technology and goods for the global energy transition London, 31 October (Argus) — As the world's leading greenhouse gas emitter, China will struggle to align its reduction efforts closer to those required under the Paris Agreement's 1.5°C global warming target while at the same time fending off trade barriers. "It is imperative to properly handle the relationship between new energy and traditional energy," President Xi Jinping said earlier this year. Chinese CO2 emissions posted zero year-on-year growth in the third quarter, despite a rebound in coal-fired output, as clean power generation also grew rapidly, Helsinki-based Centre for Research on Energy and Clean Air (CREA) says. But Beijing remains guarded on whether its CO2 emissions have peaked, with coal still an integral part of its energy mix. It has set a 2030 target for peak emissions but will likely reach this some years early, the country's new climate envoy, Liu Zhenmin, says. "If we want to achieve global carbon [neutrality], first we have to provide the world with more affordable, secure technology. Second, we need to address financing," Liu says, referring to the finance requested by developing countries from developed countries to enable the former to reach their climate targets. China is set against being dragged into contributing to the new climate finance goal, despite calls from developed countries for it to do so. China deals with climate action on its own terms. It opted out of a pledge to treble renewable power capacity and double energy efficiency at last year's UN Cop 28 climate summit in Dubai, although it did agree to the final conference text, which made mention of the pledge. China's nationally determined contribution (NDC) includes a target date for reaching peak CO2 emissions, but lacks clear goals for peaking emissions of other greenhouse gases such as methane. Beijing is due to update its NDC by February. To remain in line with the Paris accord's 1.5°C target, the new NDC will need to aim for an at least 30pc reduction in CO2 emissions from 2023 levels by 2035 and set absolute reduction targets, CREA says. And sales of new energy vehicles (NEVs) — battery electric, plug-in hybrid and fuel-cell vehicles — need to account for 60pc of total new car sales by 2035, from 50pc currently, to drive transport sector emissions down to 2020 levels, CREA says. China had nearly 25mn NEVs on its roads in June and is on course to quadruple this figure by 2030. Its renewable power capacity has already surpassed a 1.2TW target for 2030, enabling Beijing to cut its approvals for new coal-fired power plants by almost 80pc on the year in January-June, according to environmental group Greenpeace. But China's coal production capacity continues to increase. Chinese power demand is set to rise by more than 500 TWh/yr in the next 5-10 years. Beijing could meet this demand with more renewable and nuclear power generation, but nuclear currently holds a mere 5pc share of China's electricity mix. Brace brace China had seemingly narrowed its climate policy differences with the US in terms of approach and objectives, and played a role alongside the US in bringing a consensus around fossil fuels language at Cop 28. But China is bracing for a showdown on climate finance at Cop 29 in Baku next month. China and advanced economies accounted for more than 95pc of electric vehicle (EV) sales in 2023, energy watchdog the IEA says. But China could be subject to huge new tariffs on exports to the US if Republican candidate Donald Trump wins the US presidential election in November. Tariffs would have to be at 40-50pc to deter Chinese EV imports, consultancy Rhodium says — the EU on 29 October announced a slew of tariffs on Chinese EVs of up to 45pc. Western countries would add $6 trillion to global energy transition costs if they decouple from Chinese products, Liu says. China's carbon emissions by source China's industrial carbon emissions Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

CNRL’s upsized TMX commitment to start in December

24/10/31

CNRL’s upsized TMX commitment to start in December

Calgary, 31 October (Argus) — Canadian Natural Resources (CNRL) will have 80pc more space on the 590,000 b/d Trans Mountain Expansion (TMX) crude pipeline at its disposal in about a month's time, executives said today. The country's largest oil and gas producer will push its contracted capacity on the country's newest export pipeline to 169,000 b/d starting on 1 December, up from 94,000 b/d. Ensuring the continuously growing company would be able to place additional volumes was top of mind for executives. "It certainly helps secure those barrels which would otherwise be potentially in an egress constrained situation," said CNRL president Scott Stauth on Thursday, adding stronger pricing is now possible by aiming volumes at California or Asia. CNRL will then hold about one-third of TMX's roughly 472,000 b/d of contracted space for the line, which moves crude from Edmonton, Alberta, to the docks at Burnaby, British Columbia. The remaining 20pc, about 118,000 b/d, is set aside for uncommitted shippers. "When you take a look at the opportunities off the west coast to further expand and diversify to additional refining destinations, that provides a significant forward opportunity for us," said Stauth. TMX has stabilized the Canadian market "more so than it ever was before," he said. PetroChina Canada on 10 October said it had offloaded its TMX capacity in a letter to the federal pipeline regulator, with some market participants suggesting CNRL was the other party in that deal. TMX roughly tripled the capacity of the existing 300,000 b/d line when it went into service on 1 May. CNRL is known for pushing production higher through acquisitions in the Western Canadian Sedimentary Basin (WCSB) and struck another major deal earlier this month. The Calgary-based company is buying Chevron's oil sands and Duvernay shale production for $6.5bn with the acquisition expected to close in the fourth quarter, but be effective for 1 September. CNRL produced 997,000 b/d of crude and natural gas liquids (NGL) in the third quarter, down slightly from 1.01mn b/d in the same quarter 2023. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cenovus at full contracted rates on TMX pipeline

24/10/31

Cenovus at full contracted rates on TMX pipeline

Calgary, 31 October (Argus) — Canada's Trans Mountain Expansion (TMX) pipeline is driving competition on the country's west coast and supporting domestic prices, according to oil sands giant Cenovus Energy, which has already filled its own capacity on the line. "TMX shipments have gone well and we have successfully ramped up to full contracted rates," Cenovus chief executive Jon McKenzie said on Thursday, only six months after the 590,000 b/d expansion was put into service on 1 May. The line nearly tripled capacity of the existing 300,000 b/d system linking Alberta crude producers with the docks at Burnaby, British Columbia, providing access to more customers and higher prices. "We continue to see really robust competition at the dock," said Cenovus' commercial executive vice-president Geoff Murray, adding that pricing realized has been reflective of global value. Murray envisions a time when the uplift in prices covers not only the variable costs but also the fixed costs of being a committed shipper on the line, of which Cenovus has about 144,000 b/d of capacity. "We're seeing things that are covering our costs of full investment in the very near future," said Murray, who says the operational performance of Trans Mountain has been "really solid". Those fixed tolls are still being determined with shippers and Trans Mountain scheduled for a regulator-led hearing in May 2025. Interim tolls in place have the fixed costs for a heavy crude shipper moving 75,000 b/d or more over a 20-year term at about C$9.54 ($6.84)/bl. Demand for the line will surely remain robust, with McKenzie anticipating "material growth" in the oil sands business over the next two years because of development activities at the company's Sunrise and Foster Creek steam-assisted gravity drainage (SAGD) assets. They could boost production by 20,000 b/d and 30,000 b/d, respectively. Elsewhere in the oil sands, the 17 kilometre (11 mile) Narrows Lake tie-back to Christina Lake is now 93pc complete and will add 20,000 b/d of output to Cenovus' production profile, starting in mid-2025. Cenovus executives still anticipate local heavy crude differentials to start to widen in "the next two to three years," which would coincide with when Trans Mountain may reach capacity . Cenovus produced 771,300 b/d of oil equivalent (boe/d) in the third quarter, down from 797,000 boe/d in the same quarter 2023. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more