February 24, 2016 [OPIS] - Houston -- The Panama Canal expansion will boost U.S. natural gas liquids exports flow and not refined oil products, Horace Hobbs, chief economist at Phillips 66, said on Tuesday.
However, the canal expansion is expected to have an indirect bullish impact on diesel demand in the U.S. markets, said Philip Rinaldi, PES’ CEO.
Both Hobbs and Rinaldi were speaking on the state of North American refining at IHS CERAWeek held in Houston.
Hobbs expects the U.S. to export more liquefied pressurized gas, including butane and propane, to Asia via the expanded canal.
OPIS notes that the West Coast market is expected to be long on products when Torrance refinery returns to full rates later this year. The West Coast market will look to export more products to South America, Mexico and Canada.
Asia is facing a glut of distillates, and gasoline appears to be balanced.
On domestic demand, Rinaldi expects the expanded canal to bring more container ships to U.S. ports, and this in turn will increase truck traffic at the ports.
A higher truck traffic will boost diesel demand, he said.
In Philadelphia, the port authority is dredging and deepening the Delaware River to accommodate larger ships in anticipation of more shipping traffic from Asia, Rinaldi said.
The expansion project at the Panama Canal is expected to be completed at end-2016.
IHS CERAWeek began on Monday and will end on Friday.
