Calumet Specialty Products Partners LP is maintaining refining operations to continue maximizing diesel production above gasoline, with limited disruptions to specialty and fuels production sites across the supply chain despite evolving demand patterns amid the coronavirus (COVID-19) pandemic.
Following strategic actions that Calumet executed over the past several years to improve business operations and reposition its portfolio with a core focus on high-value specialty lubricants and chemicals with greater long-term demand defensibility, the company’s businesses to date have not experienced any significant step down in customer demand, Calumet said on Apr. 9.
“[W]e have reconfigured our remaining fuels assets such that gasoline output is only about 20% of system wide crude runs, while the higher margin distillates (ultralow-sulfur diesel, jet fuel, and solvents) are 40% of crude runs during normal market conditions,” said Steve Mawer, Calumet’s chief executive officer.
Given the current unusual market conditions and uncertain demand landscape, however, Calumet’s operations are equipped to continue stepping gasoline production lower while retaining diesel output, if necessary, according to Mawer.
“For example, our [30,000-b/d refinery in Great Falls, Mont.] can sequentially reduce gasoline output to zero without cutting crude run[s] or diesel production at all. Moving forward, we will use our above-average optimization flexibility during the current demand environment and price dynamics," said Mawer.
Calmuet did, however, revise its capital budget guidance for 2020 lower to $50-60 million from an original guidance of $80-90 million.
"Calumet exited the first quarter with sufficient liquidity to appropriately fund its business operations in this fast-changing business environment," said H. Keith Jennings, Calumet’s chief financial officer. "We intend to manage our business to generate positive cash flow from operating activities, and will take further steps, as required, to manage costs and working capital through this period of global economic uncertainty."
Alongside the Great Falls refinery, Calumet’s major refining business also includes its 60,000-b/d refinery in Shreveport, La. The company also operates a series of smaller specialty-product manufacturing sites in western Pennsylvania, Texas, New Jersey, and eastern Missouri.
