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Tag: Investment

New realities

Ordinarily I try to choose a different subject each issue for an editorial, but as April lengthens towards May, and here in the northern hemisphere we start to see the first signs of summer, there unfortunately remains only one subject that is obsessing every industry, and that is the Covid-19 pandemic and its impact upon every aspect of our lives. Since our last issue we have all had to come to terms with ‘lockdown’ and ‘social distancing’, as the grim toll of deaths climbs in all regions. Here at BCInsight we are working without an office as best we can, and issues of Sulphur will continue to land in your email inboxes, but paper copies of the magazines may take longer to arrive, if at all, as shipping and customs procedures are tightened all around the world, and I can only apologise and ask that you bear with us.

The new normal

The devastating effects of the Covid-19 pandemic continue to be felt around the world. At time of writing, nearly 4 million cases have been recorded, and at least a quarter of a million people have died, with the suspicion of many more, either from accidental or deliberate undercounting. Figures for excess deaths above a normal seasonal baseline show that places such as Turkey, Ecuador and Indonesia have probably been far worse affected than the official statistics show. There are nevertheless finally hopeful signs that Europe, so far the worst affected region, is beginning to follow the pattern of East Asia and Oceania and that cases are falling. The infection also seems to have peaked in North America, though in the US there is a long tail of infections. Elsewhere, cases are still rising in countries such as Brazil and Mexico.

Sulphur Industry News

Canadian Press reports in December have highlighted concerns that the new tighter IMO rules on sulphur content of marine fuels, which came into force on January 1st, could lead to reduced demand for oil sands bitumen and syncrude. Canadian oil output has been steadily increasing over the past two decades, mainly due to expanded bitumen recovery, which now accounts for 50% of Canada’s 4.6 million bbl/d of oil production. However, the discount for Western Canadian Select bitumen blend crude prices versus North American benchmark West Texas Intermediate could almost double to $30/bbl in January, according to consultancy Wood Mackenzie, averaging US$23-24/bbl for most of 2020, as US and other refiners use less heavy, sour oil and switch to lower sulphur feeds to try and optimise low sulphur fuel oil (LSFO) production. However, reduced output from Canada’s competitors Mexico and Venezuela is currently helping to mitigate this. Oil sands producers with refineries or upgraders are expected to benefit as the new standards will increase demand for refined low-sulphur fuels. For example, Husky Energy has expanded its Lloydminster Upgrader to produce an extra 4,000 bbl/d of diesel, and reconfigured its Lima refinery in Ohio to use more heavy oil.