Marathon Invests in New Projects to Boost Margins on Rosy Refining Outlook

Marathon Petroleum is investing in three new projects at its 638,000 b/d Garyville, La., and 140,000 b/d El Paso, Texas, facilities with an aim to increase margins and fuel production on the back of a bullish refining outlook, Chief Executive Maryann Mannen said on Tuesday.

Those new projects “underscore both the strength of our portfolio and our confidence in the long-term fundamentals of the refining sector,” Mannen said during a call to discuss the largest U.S. refiner’s fourth-quarter earnings with analysts.

The first project will increase the Garyville refinery’s crude throughput by 30,000 b/d as well as margins by reducing the plant’s reliance on buying higher-cost intermediate feedstocks, with the incremental crude capacity expected to be online by 2027.

Marathon’s second investment that is also at its Garyville facility will improve the facility’s flexibility to use different crudes, allowing an additional production of 10,000 b/d of “export-grade premium gasoline” to meet
strong international demand, Mannen said. That project also is expected to start up by 2027.

Mannen said the company also started to upgrade an FCC and alkylation unit to improve the El Paso refinery’s ability to produce higher-value products and specialty gasoline for local markets. Marathon expects to bring the higher capacity into service in the second quarter of this year.

In addition, a previously announced project to increase jet fuel production at the 266,000 b/d Robinson, Ill., refinery is expected to be complete in Q3, and the 665,000 b/d Galveston Bay, Texas, refinery’s distillate hydrotreater project to add 90,000 b/d of ULSD production should be complete by 2027, Mannen said.

Turning to West Coast operations, Chief Commercial Officer Rick Hessling said the recent closure of two California refineries provided a “significant tailwind” for Marathon. This is because Marathon can move fuel from its 122,000 b/d Anacortes, Wash., refinery to supply Northern California if needed, which would take much less time than importing from Asia.

Reporting by Frank Tang, ftang@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com