The value of an octane barrel has risen significantly in recent years going from $2.10 in 2010 to $3.99 in 2015. This has surprised industry analysts since the refining industry has been blending a growing amount of ethanol, which has an octane rating of ~113, and the general consensus was that the industry had a […]
Improving Capital Projects with Modularization
Capital projects drive growth in the oil and gas industry and, yet, are plagued by cost and schedule overruns. In 2015 there were an estimated 800 oil and gas projects costing over $500 billion and one-third will end up facing delays. Operators are constantly searching for ways to improve performance, meet schedules, and reduce costs. […]
E15 anyone?
The ethanol industry is struggling again thanks to lower gasoline demand and higher corn prices. Plant shutdowns that started with players at the high end of the supply curve have now spread to the larger companies, including Valero and ADM who have reduced or idled capacity. Crush spreads today stand at less than 10 cents […]
The return of the refiner?
Refiners have seen cause for growing optimism in the past few months, especially those in the U.S. Gulf Coast, Rockies, and the Midwest. Three factors are driving prospects of a renewal after nearly five difficult years: 1. Supply rationalization: Nearly 4.5 million barrels per day of refining capacity has disappeared in the past five years. […]
Cars for the masses
Today the Wall Street Journal published a great piece on efforts by leading automakers such as Honda, Nissan, and General Motors to develop cheap cars for China’s millions. These auto industry leaders are all collaborating with local, often state-owned Chinese companies to develop and produce cheap, small cars costing anywhere from $4,000 to $14,000. While pessimists […]
Shell may sell its refineries to Essar
Shell is discussing the sale of its three European refineries to Essar, as discussed in a previous post, at $4,000 to $5,000 per barrel of capacity. While valuation will depend on the three refineries’ individual configurations and complexity, the transaction is at a significant discount from the industry’s Golden Age. The three refineries with more […]
European refineries on sale
Several refineries are being sold in Europe — see table below based on Reuters data — because of moderating demand for fuels, the resulting overcapacity, growing share of biofuels, and anticipated expense associated with reducing carbon emissions. It is interesting that most bidders are the emerging economies such as India, China, and Russia, where rapid economic […]
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