NEW YORK (Reuters) - The closure of some U.S. oil refineries will have a net benefit to Magellan Midstream Partners LP’s refined products pipeline systems, the company’s chief executive officer said on Wednesday.
“It creates the opportunity for more volume movement to replace what the refinery was putting into the market directly and it will create a longer-haul movement for existing volumes because they need to be transported from farther away,” said CEO Mike Mears, speaking at the Barclay’s CEO Energy-Power conference.
Multiple North American oil refiners have announced closures, or plans to repurpose their plants, as global fuel demand remains lower after plummeting from stay-at-home orders caused by the coronavirus health crisis.
Crude oil benchmarks are trading near three-month lows as the pandemic continues, with coronavirus cases rising in parts of Europe, India and in areas of the United States. [O/R]
HollyFrontier’s Cheyenne, Wyoming refinery, which is being converted into a renewable diesel plant, and Marathon Petroleum’s shuttering Gallup, New Mexico, refinery are among the recently announced closures that would benefit Magellan’s system, Mears said.
He said expects the trend to continue as the country moves away from traditional fuel sources in the coming decades.
“It’s very hard to predict when and who, but it will happen over the course of time,” Mears said.
The Tulsa, Oklahoma-based midstream company, which also transports crude oil, said it has seen demand for gasoline linger at lower levels than predicted. Metropolitan areas have lagged behind rural communities, where fuel demand has come close to fully recovering, Mears said.
Reporting by Laila Kearney; Editing by Chris Reese and David Gregorio
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