Marathon to Indefinitely Idle Gallup, Martinez Refineries
8/03 7:56 AM
Marathon to Indefinitely Idle Gallup, Martinez Refineries OAKHURST, N.J. (DTN) --- Marathon Petroleum Corp. today announced plans to "indefinitely idle" its 26,000 bpd Gallup refinery in Jamestown, New Mexico as well as its 170,000 bpd refinery in Martinez, Calif., as product demand continues to suffer due to the COVID-19 pandemic. MPC's Refining & Marketing segment reported a loss from operations of $1.6 billion in the second quarter, compared with income of $906 million for the second quarter 2019. The decrease in R&M earnings was primarily due to reduced throughput and lower crack spreads driven by lower demand associated with COVID-19, and lower crude differentials. R&M margin was $7.13 per barrel for the second quarter and crude capacity utilization was 71%, resulting in total throughputs of 2.3 million bpd and clean product yield of 84%. MPC reported net income of $9 million compared to $1.1 billion in the second quarter 2019. Second-quarter 2020 results include a pre-tax lower of cost or market inventory benefit of $1.5 billion. Adjusted net loss was $868 million for the quarter profiled, compared to adjusted net income of $1.1 billion. "Our second quarter results reflect a full three months of the challenges COVID has created for our business," said President and CEO Michael J. Hennigan. "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 West Coast and Midwest." Hennigan continued, "In response, we are executing on the actions we announced in May and are advancing three strategic priorities which lay the foundation for our long-term success. First, we strengthened the competitive position of our assets with the decision to indefinitely idle our Gallup and Martinez refineries, and are evaluating strategic repositioning possibilities for Martinez." The company said the Martinez refinery might be repositioned to produce renewable diesel. The Gallup refinery was idled around mid-April in response to COVID-19 while the Martinez refinery was idled by late April. Hennigan said the company has begun implementing commercial strategy changes, and also lowered capital spending. "I'm confident we will meet the $950 million expense reduction target we previously announced for 2020. We are also implementing plans to structurally lower costs in 2021 and beyond," Hennigan said. (c) Copyright 2020 DTN, LLC. All rights reserved.
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