Marathon (MPC) Shuts down Louisiana Oil Refinery Due to Fire
Marathon Petroleum MPC announced the partial shutdown of its Garyville, Louisiana refinery due to a fire that broke out recently. This refinery is one of the largest in the United States, with the capacity to refine nearly 600,000 barrels of crude oil per day. The incident has led to a significant increase in gasoline and diesel fuel prices in futures markets. Let's explore the incident's specifics, the response and investigation, and the subsequent effect on business operations and petrol and diesel fuel prices in such markets.
The Incident
On the morning of Aug 25, a fire broke out at the Garyville refinery, which is known as the third-largest oil refinery in the United States. Situated in Southeast Louisiana, the refinery's location along the Mississippi River has strategic importance in the industry.
The fire occurred in an area where crude oil and fuels are stored in massive circular tanks. Notably, the incident was accompanied by a leak of naphtha, a flammable liquid hydrocarbon mixture. Local media footage depicted the fire affecting two large tanks, with significant rise in flames and smoke. The fire appeared to be within a contained area.
Response and Investigation
Marathon swiftly responded to the incident by shutting down specific refinery units. This was a necessary safety measure to contain the situation and prevent further damage. The exact cause of the fire remains unknown at this point. However, the company has initiated a comprehensive investigation to determine the factors that led to this unfortunate event.
Evacuation Measures
MPC reported that one firefighter was being evaluated for heat stress, but no other injuries were reported.In an abundance of caution, St. John the Baptist Parish issued a temporary evacuation order for residents living within a two-mile radius of the refinery's affected area. This precautionary step aimed to safeguard individuals from potential risks and ensure their well-being during the incident.
Refinery Location and Capacity
The Garyville refinery has a significant role in the energy landscape, with a crude oil refining capacity of 596,000 barrels per day (bpd). Its production capacity includes 265,000 bpd of gasoline and 230,000 bpd of diesel. These figures highlight the refinery's importance in supplying essential fuels to meet consumer demands across the United States.
Impact on Operations
The incident has inevitably disrupted the refinery's operations, with the shutdown of units affecting the production of gasoline and diesel. The extent of the impact on the company's financials and the broader energy market will depend on the duration of the shutdown and the success of the investigation in determining the root cause of the fire.
Conclusion
The Marathon refinery incident in Garyville has underscored the intricate interplay between industrial operations, safety protocols and market dynamics in the energy sector. As the company works diligently to fully extinguish the fire and assess the extent of the damage, the broader industry is grappling with the potential implications for fuel supply, pricing and market stability. This incident serves as a reminder of the complex nature of the energy landscape and the paramount importance of safety in all operational endeavors.
Zacks Rank and Key Picks
Currently, MPC carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are CVR Energy CVI, sporting a Zacks Rank #1 (Strong Buy), and Evolution Petroleum EPM and Archrock AROC, both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CVR Energy (CVI) is valued at around $3.31 billion. In the past year, its shares have lost 7.4%.
CVI currently pays a dividend of $2 per share, or 6.07% on an annual basis. Its payout ratio currently sits at 30% of earnings.
Evolution Petroleum is worth approximately $291.1 million. EPM currently pays a dividend of 48 cents per share, or 5.49% on an annual basis.
The company currently has a forward P/E ratio of 8.56. In comparison, its industry has an average forward P/E of 14.10, which means EPM is trading at a discount to the group.
Archrock is valued at around $1.96 billion. It delivered an average earnings surprise of 15.08% for the last four quarters and its current dividend yield is 4.96%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
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CVR Energy Inc. (CVI) : Free Stock Analysis Report
Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report
Evolution Petroleum Corporation, Inc. (EPM) : Free Stock Analysis Report
Archrock, Inc. (AROC) : Free Stock Analysis Report
