Replies to post #118713 on MMEX Resources Corp (MMEX)

[jmjjw]

The use of bunker/HFO has been on the decline since 2013, ahead of IMO 2020. Resid, and related fractions have historically been the only portions of the process stream with lower value than crude itself.

One of the elements of MMEX-scam is the lack of hydro-treating and desulfurization capability - these components would be required even for the sweetest WTI or WTI-light feedstocks. It is one of the elements that makes it easy to torpedo Mad J.’s claims that MMEX-scam has a market opportunity for IMO 2020 marine fuels. Anyone targeting IMO 2020 opportunity needs:

a) the capability to produce low-sulphur HFO
b) the capability to produce fuel-quality distillate (diesel)
c) a channel to the market, which can’t be met by an inland refiner

For downstream entities like BDCO, their might be an opportunity, given the capability to meet ‘b’ and ‘c’ - proximity to the coastal bend, and a product that can be pipelined. For MMEX-scam, none of those criteria are met.

For marine vessels still burning HFO, without any retrofit, the vessels will ultimately be scrapped - that is maybe a net positive for marine construction/fabrication. For more valuable, contemporary vessels, that are either dual-fuel (HFO/bunker or distillate) or that have scrubbers installed, there’s less impact. Running on distillate is three to six times more expensive per vessel mile/ton, so the net cost increase is likely reflected in COGS, and passed on to the consumer/purchaser - the transporter won’t absorb it.

Refiners in general have already shifted production from HFO, channeling that part of the stream via cracking to higher-value products (away from fuels). Coke and asphalts still have some value, and continue to be channels to generate some revenue on what would otherwise be waste. The coastal refiners figured this out long ago, and have flex in their distillate production to absorb all of IMO 2020 shift in demand.

What, if any, are your thoughts on the upcoming IMO 2020 rule and the impact it could have on the economy but more specifically refinerys in general?