Repairs at Exxon's Joliet support Buckeye CBOB, widen spread to West Shore

Houston (Platts)--13 Feb 2018 124 pm EST/1824 GMT

Repair work at ExxonMobil's 238,600 b/d refinery in Channahon, Illinois, that was planned for March has begun in February, encouraging a wider spread between CBOB on the West Shore Pipeline and on the Buckeye Complex in Chicago, Midwest market sources said Tuesday.

In late December, US market sources, including a source familiar with refinery operations at Joliet, told S&P Global Platts that the company was planning repair work in 2018 for Joliet's crude distillation unit. These repairs were scheduled to begin in March and last about 45 days.

But on Tuesday, US market sources indicated these CDU repairs may already be underway at Joliet. "We hear their crude unit is down. It has had ongoing problems since December" and "I think they moved the work up" as a result, one source said.

A second market source agreed, saying that the CDU's output, and, by extension, refined product production, currently appear to be running below their typical levels at Joliet.

On February 2, Exxon Joliet notified Illinois state regulators of flaring caused by "equipment prep," which may have been part of preparations for repairs on the CDU. On Tuesday, Tricia Simpson, a spokeswoman for ExxonMobil, confirmed that Joliet began planned maintenance on February 1. She did not say why the Joliet repair work was moved from March to February.

The first two market sources also said that the ahead-of-schedule repairs at Joliet are a key factor behind a trend that has puzzled market participants in Chicago all month: persistently wide spreads between CBOB on the West Shore Pipeline, Badger Pipeline and Buckeye Storage Complex. On Tuesday, CBOB on the West Shore pipeline was heard traded at futures minus 12 cents/gal, Wolverine Pipeline CBOB was heard traded at futures minus 5.50 cents/gal and Buckeye Complex CBOB was heard done at futures minus 3.50 cents/gal.

Platts does not keep historic data for these spreads, but most of the time, Buckeye CBOB seems to maintain a premium of 4 cents or fewer above West Shore CBOB.

The second market source said that in the spring of 2017, a section of the West Shore Pipeline carrying CBOB from the Milwaukee area to Greenway was shut. Other sources have said that with this pipeline segment shut, supplying Green Bay with West Shore CBOB usually involves some trucking, which explains why West Shore CBOB almost always trades at a discount to other pipelines.

But now "spreads are super wide ... because [Exxon Joliet] is down in conjunction" with this pipeline segment, the second source said. "Joliet makes a lot of Illinois-compliant BCX grade gasoline," he added.

The first market source agreed that because Joliet is a key supplier to Buckeye, the downed crude unit there is supporting CBOB differentials on that storage system to a greater extent than other pipeline differentials in the area.

--Seth Clare,

--Emmanuel Belostrino,

--Janet McGurty,

--Edited by Annie Siebert,

Copyright © 2018 S&P Global Platts, a division of S&P Global. All rights reserved.