Marathon Petroleum Corp. (MPC) is permanently shuttering crude oil processing at two of its US refineries as part of the operator’s strategy to increase its overall competitiveness as a result of decreased product demand caused by the ongoing coronavirus (COVID-19) health crisis.
MPC has decided to indefinitely idle its 161,000-b/d refinery in Martinez, Calif., as well as its 27,000-b/d refinery in Gallup, NM, with no plans to restart normal operations at either manufacturing site, the company said in its Aug. 3 second-quarter 2020 earnings report to investors.
“Our second quarter results reflect a full [3] months of the challenges [COVID-19] has created for our business, said Michael J. Hennigan, MPC’s president and chief executive officer. “We began April with demand at historic lows. Despite seeing some recovery during the quarter, demand for our products and services continues to be significantly depressed, particularly across the [US] West Coast and Midwest.”
Alongside reducing 2020 capital spending by $950 million and implementing plans to structurally lower costs in 2021 and beyond, idling of the Martinez and Gallup refineries comes as another response to strengthen the competitive position of MPC’s assets, Hennigan said.
While MPC disclosed no further details regarding any future plan for the Gallup refinery, Hennigan did confirm the company is evaluating strategic repositioning of the Martinez refinery into a renewable diesel plant, which would align with objectives of California’s Low Carbon Fuel Standard (LCFS) as well as MPC’s own greenhouse gas (GHG)-reduction targets.
In a separate July 31 post to its website announcing suspension of processing activities at the refineries, MPC also said it will convert the Martinez refinery into a terminal facility.
“Indefinite idling [of the Martinez and Gallup sites] unfortunately means most jobs at these refineries will no longer be necessary, and we expect to begin a phased reduction of staffing levels in October,” according to MPC’s website post.
MPC said it does not expect idling of the two refineries will lead to supply disruptions in either California or New Mexico, as the company will continue meeting customer commitments using its integrated refining system.
North Dakota biorefinery update
MPC also confirmed on Aug. 3 that construction remains ongoing the operator’s previously announced project to convert its former 19,000-b/d refinery in Dickinson, ND, into a 12,000-b/d, 100% renewable diesel refinery (OGJ Online, Dec. 20, 2019).
Still on schedule to be completed in late 2020, the biorefinery will use a feedstock of corn, soybean oil, and other organically derived feed to produce LCFS-compliant renewable diesel that will be sold into the California market, MPC said.
