HOUSTON Jan 29 Marathon Petroleum Corp,
Valero Energy Corp and Phillips 66, the three
largest U.S. independent refiners, reported quarterly results on
Wednesday that topped Wall Street estimates as cheaper crude
prices on the Gulf Coast helped profits.
Startups of multiple pipelines in Texas throughout 2013
increasingly brought cheaper inland U.S. crudes to Gulf Coast
refineries, replacing more expensive imports and alleviating
bottlenecks in the Midwest.
Seaway is one such project, involving the reversal of an
existing pipeline to deliver 400,000 barrels per day from the
Cushing oil storage hub to the Gulf Coast. The pipeline, owned
by Enterprise Product Partners and Canada's Enbridge Inc
began operations in May 2012, was expanded in January
2013 with a new twin line with capacity of 450,000 bpd planned
to start up in the second quarter.
Seaway was the only major artery from the bloated U.S. crude
futures hub in Cushing, Oklahoma, to the Gulf Coast, until last
week when TransCanada Corp opened its 700,000 bpd Gulf
Coast pipeline - the southern leg of the controversial Keystone
The new infrastructure - built in large part to handle
surging output of unconventional North American crudes - has
benefited plants on the Gulf Coast, which has more than 40
percent of U.S. refining capacity.
Many of those refineries have ramped up exports of fuels to
Latin America and Europe. Phillips 66 said its refined product
exports totaled 197,000 barrels per day in the fourth quarter, a
32 percent rise on the year.
"Gulf Coast refiners are the best positioned to benefit from
price-advantaged North American crudes and the global refined
product market," Roger Read, a refining analyst at Wells Fargo,
told clients on Wednesday.
The new infrastructure last year eased Gulf Coast crude
prices, cutting costs for refiners. Gulf Coast crude benchmark
Light Louisiana Sweet, which had traded at an average
$1-a-barrel premium to international Brent for most of
last year, fell abruptly to a steep discount in the fourth
quarter - further discouraging imports.
The cost benefit was similar to the advantage held by
Midwest refiners in recent years, as the Cushing glut pushed
West Texas Intermediate (WTI) crude prices to sharp
discounts to Brent and other global crudes.
Valero Energy's fourth quarter profit was lifted by a $325
million gain on the sale of its interest in retail business CST
Brands Inc. Excluding items, the San Antonio company had a
profit of $1.78 per share. Analysts on average had expected a
profit of $1.66 per share.
Marathon Petroleum, which operates large plants in
Garyville, Louisiana and Texas City, Texas, also had a profit
that surpassed expectations, but maintenance costs contributed
to a lower quarter profit.
For the fourth quarter, Marathon reported net income of $626
million, or $2.07 per share, compared with $755 million, or
$2.24 per share, in the year-ago period. Excluding items,
Marathon had a profit of $2.10 per share, a figure that handily
beat analysts average estimate of $1.15 per share, according to
Thomson Reuters I/B/E/S.
Houston-based Phillips 66 had a quarterly profit of $826
million, or $1.37 per share, compared with $708 million, or
$1.11 per share in the same quarter a year earlier. Adjusting
for certain items, Phillips 66 had a per share profit of $1.34.
Analysts on average had expected a profit of $1.10 per share,
according to Thomson Reuters I/B/E/S.