  Johnlodge Member Username: Johnlodge Post Number: 7266 Registered: 10-2003 |
quote: More... http://www.freep.com/apps/pbcs .dll/article?AID=/20080620/BUS INESS/80620036 | ||
Danny Member Username: Danny Post Number: 7415 Registered: 02-2004 |
HAH! We're dealing with more rising gas prices and Marathon keeps in running by expanding more stink factories and would pollute the rest of SW Detroit and other downriver cities. Thank you Marathon for contributing to Global Warning. | ||
Mackinaw Member Username: Mackinaw Post Number: 5003 Registered: 02-2005 |
I'm really interested by the way corporations can strike deals like this to make something happen. Sounds good on the whole, especially the new jobs. | ||
Mackinaw Member Username: Mackinaw Post Number: 5004 Registered: 02-2005 |
Thank their consumers-- the drivers of America-- for that, Danny, not them. | ||
Johnlodge Member Username: Johnlodge Post Number: 7275 Registered: 10-2003 |
I think Detroit should get a free pass on the Environmental thing for awhile. Let Seattle be green for us. We just need some freakin' jobs. | ||
Mackinaw Member Username: Mackinaw Post Number: 5006 Registered: 02-2005 |
Tradable permits for pollution reduction. Your logic is spot on, and it's working in Europe for CO2 reduction, and it's already worked in the USA for SO2 emissions. | ||
3rdworldcity Member Username: 3rdworldcity Post Number: 1148 Registered: 01-2005 |
But as usual, MI taxpayers are getting ripped off in the process. The idiots in Lansing must never rest. They gave Marathon, what, $100,000,000 million in tax incentives to get the deal done even though Marathon would have expanded its refinery without them. Why? Last year Marathon purchased Western Oil Sands, Inc. (a Canadian oil company) for $6.5 billion and assumed $700,000,000 of Western's debt. Marathon thereby acquired Western's interests in various Athabaska oil sands projects which will increase Marathon's oil reserves by several million bbls. At the time, Marathon stated that it intended to increase the capacity of it's Detroit refinery to handle the heavy Canadian crude. It stated it could increase its Detroit capacity for "less than half the capital investment needed to built new upgrading capacity in Alberta." From the Oil and Gas Journal, August 6, 2007, vol. 105, issue 29 (the oil business "bible.") So, had MI and the City of Detroit refused to give away our taxpayer dollars, does anyone really think Marathon would have refused to expand the refinery? Hardly. Taxpayer giveaways may have benefits to the taxpayers in certain cases, but certainly not all, and MI and the City fail us by failing to determine who should get them and disclosing and justifying the predicted benefits by doing so. A side note: everyone bitches about the cost of gasoline. However, consider how much product Marathon must sell, and at what price and profit, to give it a return on its investment of $2 billion + for a crummy little 15,000 bbl per day capacity increase. | ||
Spacemonkey Member Username: Spacemonkey Post Number: 742 Registered: 03-2006 |
Didn't the oil companies say the reason gas prices are so high is because there aren't enough refineries? This expansion should help lower gas prices then, right? | ||
Mackinaw Member Username: Mackinaw Post Number: 5007 Registered: 02-2005 |
A glut of local refineries can help reduce prices locally, due to transport cost reduction. See Houston and Newark for examples. As for overarching costs across the country, more refineries might have an effect-- but gasoline comes from oil, of course, so that price is going to lead the way when it comes to gasoline prices. | ||
Novine Member Username: Novine Post Number: 573 Registered: 07-2007 |
"I think Detroit should get a free pass on the Environmental thing for awhile. Let Seattle be green for us. We just need some freakin' jobs." Why are the two mutually exclusive? Last time I checked, Seattle's economy seemed to be doing just fine while still being green. | ||
Mwilbert Member Username: Mwilbert Post Number: 275 Registered: 11-2007 |
"consider how much product Marathon must sell, and at what price and profit, to give it a return on its investment of $2 billion + for a crummy little 15,000 bbl per day capacity increase." They aren't spending over a billion dollars for the 15K bbl/day (I think it is actually 13K). They are spending it to be able to process the heavy crude, on which they should easily be able to get an extra $25/bbl margin (because heavy crude sells at a heavy discount.) If that refinery processes 100Kbbl/day, that would be $2.5 millon/day. | ||
Benfield Member Username: Benfield Post Number: 10 Registered: 06-2008 |
Oil is the problem, not the solution. (Message edited by benfield on June 20, 2008) (Message edited by benfield on June 20, 2008) | ||
Hardhat Member Username: Hardhat Post Number: 245 Registered: 10-2003 |
Here's a link to Marathon's site on the refinery expansion. http://www.detroithoup.com/ Here's a copy of Marathon's press release. Mucho construction jobs. Bring 'em on. CONSTRUCTION BEGINS ON MARATHON’S DETROIT REFINERY UPGRADE PROJECT Project to Add 400,000 Gallons of Transportation Fuels Daily, Hundreds of Construction Jobs HOUSTON, June 20, 2008 –Marathon Oil Corporation (NYSE: MRO) today announced that construction of the estimated $1.9 billion heavy oil upgrading project at its Detroit refinery is underway following issuance of an air quality permit by the Michigan Department of Environmental Quality (MDEQ). With expected completion in late 2010, the project will increase the refinery’s total capacity from 102,000 barrels per day (bpd) to 115,000 bpd, which will include an additional 80,000 bpd of heavy oil capacity. The increased refining capacity will supply more than 400,000 additional gallons of clean transportation fuels a day to the marketplace. “The Detroit Heavy Oil Upgrade Project is illustrative of strategic investments we’re making across our downstream business to increase coking capacity, lower feedstock costs as well as increase efficiency and flexibility, so we can continue providing competitive returns in a challenging downstream environment,” said Gary R. Heminger, executive vice president of Marathon and president of the company’s refining, marketing and transportation operations. Marathon’s Detroit Heavy Oil Upgrade Project will require an average of 800 construction workers a day until its completion. In addition, the expansion will increase the refinery workforce by 135 full-time employees. There are 480 full-time employees at the refinery today. “By sourcing additional crude oil from our North American neighbors in Canada, this important project will provide improved crude oil supply security for Michigan’s only refinery. Since purchasing the refinery in 1959, Marathon has made substantial investments in the facility, including the completion of a more than $300 million expansion and clean fuels project in 2005. Safety and environmental stewardship will continue to be our primary focus during the construction of the Detroit Heavy Oil Upgrade Project,” Heminger said. In addition to compliance with the stringent environmental requirements set out by the MDEQ permitting process, Marathon has committed to going beyond compliance with additional environmental enhancements that include: • Retrofitting 150 Detroit Public Schools’ buses with diesel emissions controls; • Adding eight additional continuous air emission monitors on process unit stacks to further monitor compliance with permit requirements; • Installing at least four ambient air monitoring stations on the refinery perimeter to monitor air quality; • Capturing emissions from trucks hauling petroleum coke at the refinery; • Enhancing street sweeping of paved roads near the refinery; • Collaborating on the city/county emergency notification system; and • Sharing emissions data with the refinery’s Community Advisory Panel and community-based organizations near the refinery. Fluor Corporation (NYSE:FLR) will provide integrated engineering, procurement and construction services for the refinery project. In addition, an associated pipeline project in six Monroe County, Mich., townships and one township in Wayne County will require hundreds of temporary construction jobs for the duration of the project. Construction on the 29-mile segment of pipeline is expected to begin in the second quarter of 2009 with completion in 2010. For additional details about the project, visit www.DetroitHOUP.com. Marathon is the fourth-largest U.S.-based fully integrated international energy company engaged in exploration and production; integrated gas; oil sands mining; and refining, marketing and transportation operations. The Company has exploration and production activities in the United States, the United Kingdom, Angola, Canada, Equatorial Guinea, Gabon, Indonesia, Ireland, Libya and Norway. Marathon is the fifth largest refiner in the U.S. with 1,016,000 bpd of crude processing capacity in its seven-refinery system. The Company's retail marketing system comprises approximately 6,000 locations in 18 states; nearly three-quarters are Marathon brand locations. Marathon serves the Midwest and Southeast as a petroleum products marketer with 87 light product and asphalt terminals and the Company owns, operates, leases or has an ownership interest in approximately 9,700 miles of pipeline. For more information, visit the Company’s Web site at www.marathon.com. # # # | ||
Spacemonkey Member Username: Spacemonkey Post Number: 745 Registered: 03-2006 |
I hate oil. | ||
Detroitrise Member Username: Detroitrise Post Number: 2549 Registered: 09-2007 |
I guess you wom't be getting around then. | ||
3rdworldcity Member Username: 3rdworldcity Post Number: 1149 Registered: 01-2005 |
Spacemonkey: And, oil hates you. It's a mutual thing. Mwilbert: You're quite wrong but I'll have to explain why when I have more time. | ||
Mwilbert Member Username: Mwilbert Post Number: 276 Registered: 11-2007 |
"Mwilbert: You're quite wrong but I'll have to explain why when I have more time." Well, I believe I have a pretty good understanding of the economics of the refinery business, but I am always willing to learn. So I'll be looking forward to your explanation as to why I am mistaken. | ||
Irish_mafia Member Username: Irish_mafia Post Number: 1341 Registered: 10-2003 |
oil is good More local refining is good Changeover to 100% Canadian product is good More jobs are good Global Warming is excellent. Happens every Spring around here and helps me float my boat! | ||
Sean_of_detroit Member Username: Sean_of_detroit Post Number: 859 Registered: 03-2008 |
Detroit is one of the few places on Earth not effected by climate change. This is going to get interesting. Surrounded by fresh water, and farm able land. Let them fight over that sandy spot, this is the true promised land. What more could one want? Foolish is the man who builds his house upon the sand. Now we are expected to show some sympathy after they (expletive) on us for so many years? :::Sigh::: I guess we'll still be there for them when they all figure it out. | ||
Bulletmagnet Member Username: Bulletmagnet Post Number: 1288 Registered: 01-2007 |
Irish_mafia, WOOT! ^  | ||
Mackinaw Member Username: Mackinaw Post Number: 5009 Registered: 02-2005 |
Detroit's not effected by climate change? That's the line of the day. And let's just say we weren't-- climate change is brought on by global, not local, levels of CO2, so our CO2 output will effect other people at the very least. Now if you meant that our effects are predicted to be less extreme than, say, the east coast, which might become submerged, or the southeast, which will turn into a savanah, then you have a point, but it will still get hotter, with more violent weather, and drastic fluctuations in precipitation and the levels of the Great Lakes...at least according to the best studies. Irish_mafia, that's all true, but the question surrounds whether it is ethically alright to bring on massive ecological change/destruction in the long term in exchange for our short-term pleasure? Who does the earth belong to? Anyway, I think Marathon's expansion is fine. Their doing nothing wrong on their part, and their responding to the market. Even if we had caps on CO2, it might be possible for their move to be perfectly okay, especially if there was a system of tradable pollution permits. An oil refinery is the tip of the iceberg, anyway-- the bulk of the issue lies with what we are driving around in everyday on our streets, and how we power our homes. The American consumers have provided the market, which they demand be fulfilled. | ||
3rdworldcity Member Username: 3rdworldcity Post Number: 1150 Registered: 01-2005 |
Mwilbert: Sorry for the delayed response. There have been conflicting reports on the amount of barrels per day of increased capacity. I believe you're correct that 1t's 13,000 bod rather than 15,000; Marathon's own press release's were incorrect initially. See http://www.eia.doe.gov/oil_gas /fwd/refcap.html for the latest Refinery Capacity Report from the Energy Information Agency. It has much more info than mosts folks want or need. I haven't been able to find the current market price for Canadian crude, but I'm sure it varies depending on many factors (producer,location, API specific gravity, miles from transportation etc.) However, it does of course sell for less than the NYMEX price, and for good reason. Heavy crude is far less desireable than higher grade crude, such as that designated as West Tx Intermediate (WTI), which is what I produce. It's the worldwide benchmark, and has an API specific gravity of around 41. Heavy crude is much less. It sells for less because it has significantly less "high end" products per bbl, such as gasoline. The refiner has to make more asphaltic based products (lower margins by far) and it costs more to refine in the first place (remover sulfer etc.) Marathon is installing a 28,000 bbl/day heavy oil coker as part of the expansion, and theoretically the refinery could refine up to 80,000 bbl/day of heavy Canadian crude. Will it? Probably, not for many years. It will refine some heavy crude to supplement it's regular supply of high quality crude which is far more profitable. Marathon appears to be a pretty forward looking company. By expanding its capacity to refine heavy Canadian crude it's looking forward to the day when U. S. and other foreign crude may not be available in sufficient amount to keep the refinery operating. That day may be closer than most people think. So, I believe that Marathon will continue to operate the refinery as it has, using primarily U.S. crude, and will refine a relatively small amount of Canadian for the next few years. (However, a consortium is planning a new 250,00bod refinery by Sarnia which will refine all Canadian crude. Some of Marathons Canadian crude is expected to go there I'm told.) Also, refinery margins are extremely thin and are going to continue that way for the forseeable future according to the gurus. It's going to take Marathon a very long time to recover its new investment, but it's probably a good insurance policy. What say you? | ||
Irish_mafia Member Username: Irish_mafia Post Number: 1342 Registered: 10-2003 |
"And let's just say we weren't-- climate change is brought on by global, not local, levels of CO2, so our CO2 output will effect other people at the very least".... of course that presumes that one believes that human activity affects global climate change in any significant way Mack...more than a few believe it is a bunch of hooey. | ||
Mackinaw Member Username: Mackinaw Post Number: 5022 Registered: 02-2005 |
Climate does change on its own, and it changes for billions of years before man and civilization was around. That can be easily shown through science. BUT, the rapid nature of the change over 100 years is abnormal. I would like to believe that it's hooey, and I used to give the people sounding the alarm a hard time, but I could not stand by that anymore. Thankfully, there are a lot of creative ways to deal with its effect on industry, such that an economy can thrive will still cleaning up its output. | ||
Burnsie Member Username: Burnsie Post Number: 1430 Registered: 11-2003 |
Irish_mafia wrote, "Global Warming is excellent. Happens every Spring around here and helps me float my boat!" More dredging might be necessary for your boat to float, since global warming is likely causing the lakes to evaporate faster than normal. And for everybody, "effecting" means "causing." The sentence "Detroit is effected by climate change" is equivalent to typing "Detroit is caused by climate change." "Affecting" is the spelling you want in this case. | ||
Mackinaw Member Username: Mackinaw Post Number: 5025 Registered: 02-2005 |
Good point. | ||
Mwilbert Member Username: Mwilbert Post Number: 282 Registered: 11-2007 |
3rdWorldCity-- I don't think we have a major disagreement here. From what I have read, the 28,000 bbl/day number you cite is just for the "delayed coker", which can upgrade the asphaltic materials you were describing. The overall upgrade is supposed to provide an additional 80,000 bbl/day of heavy capacity, and the ability to process heavier oil is why Marathon thinks it is a good idea to spend the $1.9 billion. Do you disagree? So then the question is, how much money do they expect to make on that additional capacity. I only threw out that $2.5 million/day estimate as a ballpark figure--there is no way to know what the heavy vs WTI spread will be in the future, and I expect it will probably diminish as more refineries add the equipment to refine heavier crudes. Canadian heavy oil has historically sold at about at 25% discount to WTI. Because prices are higher now, I think the percentage has slipped a bit, but there is a big differential. However, I couldn't find a current number either, so if I am way off on the discount for the heavy crude, I would be way off on the profitability of the expansion too. And I should have only counted the 80,000 bbl/day of heavy oil capacity. And let's throw that they average 85% of capacity over time. That would be $1.7 million/day. It is still a nice return. I'm perfectly willing to believe that they won't make that much, and there are some increased operating costs in processing heavy crude, but (as a Marathon shareholder) I expect to see a lot of it show up as profit. But I don't see where I was wildly off-base with my original posting. | ||
Irish_mafia Member Username: Irish_mafia Post Number: 1343 Registered: 10-2003 |
We have seen the need for dredging for several years now Burnsie. The key to higher water levels is frozen lakes to avoid evaporation, more snow on the Canadian shore of Superior to provide a healthy volume of melt and perhaps, no leaks in the St. Clair River from our Corps of Engineers Dredging...hmmm dredging begets dredging? My new boat only draws 4', so I am in a better position than some. In regards to Global Warming...it has been cooler this summer. | ||
3rdworldcity Member Username: 3rdworldcity Post Number: 1156 Registered: 01-2005 |
Mwilbert: I don't think we disagree on much. I think we could both use some more info. I hope Marathon makes every dime you predict it will; even though refinery margins are pretty thin now, I think Marathon is very well positioned w/ its Canadian play to profit considerably in the future. I sell all my oil to TEPPCO, at a $2.80/bbl premium over Conoco's posted price, which takes me almost to the NYMEX price. The TEPPCO guy I talked with Friday told me they're cutting costs wherever they can to try and maintain their margins. TEPPCO is strictly a pipeline/refiner w/ no retail stations, which may or may not be a good thing. I've read in the trades that the Marathon is spending almost $3 billion on its 245,000 bbl/day LA refinery to double its capacity to produce diesel fuel, which M claims will be over 50% 0f the motor fuel mkt by 2020. They're no dummies, that's for sure, and I hope your stock does very well. | ||
Sean_of_detroit Member Username: Sean_of_detroit Post Number: 892 Registered: 03-2008 |
Yes, I meant affected. Thanks for the correction. I slipped. I don't know why I always do things like that. Their, there, and they're is another one I keep doing. Knew and new is another one too. That is, even though I know the differences well. It's a subconscious thing I think. It's weird. And yes, I know everyone is really affected by climate change, but Detroit is not a house built on the sand. That is all I really meant by that. Sorry Mackinaw, I said it wrong. As far as the oil refinery, this has been a goal for awhile, has it not? I remember seeing this project mentioned as a goal back in 2002 on a few reports stating basic Michigan goals. I think I have some of those saved on here somewhere... where they talking about something else? |
