Lower refining margins, production cap HF Sinclair Q3 income

HF Sinclair Corp., Dallas, reported third-quarter 2023 net income of $790.9 million, down from $954 million during the same quarter in 2022, amid lower refining margins and product sales resulting from increased scheduled plant maintenance during the period.

Alongside lower refining margins in both the US West Coast and Midcontinent regions, the quarterly income decline also stemmed from reduced output and sale of products resulting from turnarounds executed during the period at the operator’s 125,000-b/sd integrated Tulsa West and Tulsa East refinery system in Tulsa, Okla., and the 30,000-b/sd refinery in Casper, Wyo., HF Sinclair said.

Turnarounds at both the Casper and Tulsa refineries were completed on time and on budget, with the Tulsa refinery now in the process of ramping up to normal operations following the planned maintenance event, Tim Go, chief executive officer and president, told investors in a Nov. 2 earnings call.

With capital spending on most scheduled plant maintenance for the year now completed—including $124 million on the Casper and Tulsa turnarounds during the third quarter—HF Sinclair expects to end the year on the lower end of full-year guidance of $900 million to $1.6 billion, said Atanas Atanasov, chief financial officer.

During fourth-quarter 2023, HF Sinclair anticipates crude oil throughputs across its entire refining system in a range of 590,000-620,000 b/d, reflecting downtime for remaining maintenance at the Tulsa refinery during the period, Atanasov said.

Crude oil throughputs during third-quarter 2023 averaged 602,000 b/d, slightly down from 646,000 b/d in third-quarter 2022 amid this year’s higher maintenance activity, said Go.

Moving forward, the company plans to maintain focus on safe and reliable operations that lower operating costs amid ongoing integration and optimization of refining availability, including refineries acquired as part of its 2022 purchase of Sinclair Cos. (OGJ Online, May 9, 2022).

With availability assessments of HF Sinclair’s refining assets already completed and work now beginning on executing plans site by site, the company aims to further unlock processing availability within each of its individual sites using those assessments, as well as other innovations and tools to increase utilization, said Valerie Pompeia, executive vice-president of operations.

Alongside continued investments in hydrogen systems at all of its plants—particularly at the 100,000-b/d Navajo refinery in Artesia, NM—the company is adding and upgrading key equipment at sites to benefit both its refining and renewables production businesses, Pompeia said.

The company said it also remains on track by yearend to complete a deal to acquire all outstanding common units of Holly Energy Partners LP (HEP) not owned by HF Sinclair or its affiliates. That deal is expected to simplify HF Sinclair’s corporate structure, reduce costs, and further integrate the HF Sinclair portfolio (OGJ Online, Aug. 16, 2023).

Refining portfolio

In addition to the Casper and Tulsa refineries, HF Sinclair’s refining system includes the:

• 135,000-b/sd El Dorado refinery in El Dorado, Kan., which processes a mix of heavy, sour US and Canadian crudes into light products for distribution to markets in Colorado and other US Midcontinent-Plains states.
• 45,000-b/sd refinery in Woods Cross, Utah, which processes regional sweet and advantaged waxy crudes into finished products for distribution via pipeline to markets in Utah, Idaho, Nevada, Wyoming, and eastern Washington.
• 149,000-b/sd Puget Sound refinery and related logistics assets near Anacortes, Wash., about 80 miles north of Seattle, which is equipped to process a mix of light, medium, heavy sweet, and sour crudes—including discounted Canadian grades and Alaskan North Slope (ANS) crude—to produce a mix of clean products for distribution via pipeline to US Pacific Northwest premium product markets, including Washington, Oregon, and British Columbia.
• 6,000-/sd renewable diesel production unit in Cheyenne, Wyo.
• 9,000-b/sd renewable diesel production and pretreatment units collocated at the operator’s Navajo refinery.
• 94,000-b/sd Parco refinery in Sinclair, Wyo., which processes a mix of Canadian heavy and Rocky Mountain sweet crudes to produce finished products for distribution via pipeline to markets primarily in the greater Rocky Mountain region.
• 10,000-b/sd renewable diesel production unit collocated at the Sinclair refinery.