WRAPUP-Cheaper crude on Gulf Coast helps U.S. refiners' profits
By Kristen Hays and Anna Driver
HOUSTON Jan 29 (Reuters) - 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 XL pipeline.
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. Continued...