WRAPUP 1-Cheap crude a boon for inland, Gulf Coast refiners;E.Coast struggles

Wed Jan 30, 2013 4:33pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Thyagaraju Adinarayan and Garima Goel

Jan 30 (Reuters) - The uneven impact of the shale oil boom on the U.S. refining industry was brought into stark relief this week as Midwest and Gulf Coast refiners with easy access to cheap domestic crude posted strong earnings, while weak margins spelled the death of another East Coast plant.

Phillips 66 and Marathon Petroleum Corp reported quarterly earnings on Wednesday that far exceeded Wall Street estimates as they fattened margins by processing more of the cheaper crude from North American shale fields.

Valero Energy Corp -- which said on Tuesday that its net income soared to $1 billion in the fourth quarter from $45 million a year earlier -- said it was looking to boost exports of refined products to South America as it used more domestic crude oil instead of more expensive imports.

"Exports of refined products are at record level," said Raymond James Analyst Pavel Molchanov. "This is boosting refineries that are on the Gulf Coast, which is really where this is taking place."

But the sudden flood of domestic crude has done little to help companies whose refineries are mostly in eastern states.

Hess Corp announced on Monday that it would exit the refining business altogether to focus on exploration and production. The company's Port Reading refinery in New Jersey, which will be closed by the end of February, incurred losses in two of the past three years.

Chief Executive John Hess has said his company's strategy is to focus on lower-risk, higher-return assets such as its position in the Bakken oil shale in North Dakota.