"Chevron eyes deal for Shell oil refinery in Pacific Northwest"
https://www.reuters.com/article/us-refinery-m-a-shell-chevron-idINKBN2BI39S
I thought we were divesting - not acquiring - assets. And based on the last update from MW, we're not making a whole lot of money after CAPEX and dividends if Brent Crude stays $60 for the next five years.
Equity is overblown. We can make money if we have margin on just about any crude.
Not much opportunity to process equity crude at Anacortes unless it comes in by ship. Crude oil pipelines and rail links bring production by land from the Bakken and Canada, and we only have some equity barrels from the latter. A lot of tankers bring crude down from Alaska to the PNW refineries, but we only have small NOJV interests up there. We don't have much crude production in the APAC region either...and a big part of what we do have is going away imminently (Indonesia). Not sure I see a lot of Enterprise Value in this purchase.
But maybe it is investment-worthy - at the right price - just as a downstream play. We still have a strong marketing and retail presence in the PNW, including a large products terminal in Portland, OR that has pipeline links all the way back up to the refineries in NW Washington.
ANS crude is not a high margin crude in the PNW....
Some of the crude is bakken from pipeline but they mostly receive oil barges with Alaskan crude.
Who knows? I bet there is a hot shot, high PSG out there with self interest is wanting to say “successfully closed acquisition of Shell refinery”. That’ll close the deal.
@2gdz, you just made a lucid, common sense argument as to why the location of that refinery is not in anyone’s best economic interest to acquire. Yet, despite Shell wanting to offload the refinery at a bargain basement price, you think it’s okay for Chevron? Maybe Shell thinks we are fools, after all we did acquire the Marcellus Shale acreage from Atlas at lost money, we started up plans to build the Kittimat LPG plant in western Canada and that flopped, and we engaged in other hair-brained boondoggles. No sir, the first part of your premise is precisely the reason Chevron must not acquire that albatross in the northwest U.S.
Strategically speaking the move doesn’t make a lot of sense. The Shell Puget Sound refinery has very limited access to Bakken and Canadian crudes due to either pipeline limitations or restrictions on rail (highest margin crudes in the area). Also, the harbor isn’t deep enough to take a full tanker for water borne heavy crudes to fill their Coker. Hard to compete with the other PNW refineries who have access.
Although, if Shell is having a fire sale after a year on market...practically giving it away... hard to say no to that deal.
For the laid off butthurt losers on this site to go work at? Sure, that would be awesome!
Another inexpensive refinery on the West Coast (outside California) makes sense to me at the right price. Anacortes basically replaces Burnaby and provides an alternative supply location for Canadian gasoline, backup for Mexico gasoline and jet fuel sales in the Northwest. Any oversupply can be "floated" to Asia Pacific.
How can the management justify or act of the future layoff without questioning their current management policies?
All the restrictions on fuel formulations in California make it very restrictive and thus wildly profitable for Chevron. Both refineries supply jet fuel to nearby massive international airports, which have been slow but rapidly coming back to life. I don’t see any desire to leave.
Well if the thought of having refineries in other states is the path forward to get out of California because of constant regulations and putting “the squeeze” (getting $$$) from oil companies, well guess what?, Washington is full of ex-Californians which infect their disastrous voting where ever they go. We know Washington is just as bad and they will do the same. Now, in “theory” production and refining “should” provide a balance. In lower oil prices, refining margins “should” be higher and therefore “should” return more profits to the company but is conditional on a whole lot of different scenarios.
Putting together a refinery portfolio to spin off all that El Segundo and Richmond liability. The final play in getting out of California.
Anacortes is the gateway to the San Juan Islands and this location would immediately become the best in Chevron,
Refineries on the West Coast are practically a monopoly, since the regulatory regimes are so restrictive. It is impossible to build another refinery anywhere on the West Coast. Maybe a good decision provided the price is right and there is a good source of feedstock.
The CEO is quite focused on the value of downstream during the lower for longer upstream prices. Look for continued expansion.
Yeah, we need another refinery like we need a hole in the head. Refineries are problematic, if not impossible to offload later on because of remediation concerns. Stay far away from refineries, as climate change policies and the eventual demise of fossil fuels are on the leftist’s agenda for this country.
I hope we buy it. We need more places to live that aren’t absolute sh*tholes. Now that AMBU is gone, there’s pretty much only Salt Lake as being a viable option for people who don’t want to deal with sweltering heat and/or abysmal traffic.