Marathon Petroleum’s big bet on the US oil market
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Marathon will purchase Andeavor for $23 billion, creating the largest refiner is the U.S. – a clear bet that the company expects the good times to continue for the U.S. oil market.
By purchasing Andeavor, Marathon will gain access to Andeavor’s logistics and terminal operations in Texas and North Dakota shale regions, the heart of the oil. According to data from S&P Global Market Intelligence, the U.S. shipped nearly 670 million barrels of oil from January 2016 through January 2018, as the shale oil boom continued. The S&P noted the booming oil production in Texas, with increasing unconventional drilling, especially in the Permian Basin, pushing the state’s production to record levels.
According to Reuters, rising output from the Permian Basin, which is the largest oilfield in the United States, has driven the nation’s crude production to an all-time record above 10.5 million barrels per day (bpd).
Combined, Marathon and Andeavor will be able to process 3.1 million bpd of crude oil into gasoline, diesel and other fuels, making it the largest refiner in the country, with Valero the second-largest with a capacity of 2.1 million barrels. According to IHS Markit, it would be the six-largest refiner in the world.
The U.S. is the world’s largest consumer of gasoline.