Marathon Petroleum Won’t Restart Two Idled Oil Refineries

Marathon Petroleum Won’t Restart Two Idled Oil Refineries

(Bloomberg) -- Marathon Petroleum Corp, the largest U.S. independent oil refiner, said it won’t restart two refineries in California and New Mexico amid concerns that demand for fuels is unlikely to return to pre-pandemic levels this year. Marathon said in a statement it will convert its 166,000 barrel-a-day Martinez, California, refinery near San Francisco into a terminal facility and may add a renewable diesel plant to align with California’s Low Carbon Fuel Standards objectives and Marathon’s greenhouse gas-reduction targets. It will also close the 26,000 barrel-a-day Gallup refinery in New Mexico. Both refineries were idled in April as Covid-19 decimated demand for refined products like gasoline and jet fuel. Marathon said May 5 during its first-quarter earnings call that Martinez and Gallup were targeted because they are the highest-cost facilities among its 16 refineries. It assumed product demand would improve enough to restart them before the end of the year. Subsequently, gasoline demand briefly improved after a slew of states attempted to reopen their economies around Memorial Day, then stalled as Covid-19 raged anew. London consultancy Energy Aspects says there is too much global refining capacity and existing refineries will be pressured by new facilities coming online that can operate more efficiently, forcing some shutdowns of older sites. It projects global demand won’t return to pre-coronavirus levels until 2022. “U.S. gasoline demand may never go back to normal,” Amrita Sen, chief oil analyst and co-founder of Energy Aspects, said in an interview., “Demand is trending low and, if ...
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