UPDATE 1-Motiva prepares Texas refinery for long shutdown

Fri Jun 22, 2012 12:09am IST

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By Erwin Seba

HOUSTON, June 21 (Reuters) - Motiva Enterprises LLC moved to prepare half its giant Port Arthur, Texas, refinery for an extended shut-down this week after a major glitch with a new unit, closing down other units and reducing oil shipments from Saudi Arabia.

In the first public acknowledgment of the severity of the problem at the plant, Motiva co-owner Royal Dutch Shell Plc said late on Wednesday that the stricken 325,000 barrel-per-day (bpd) unit was shut due to "corrosion problems," as originally reported earlier this week by Reuters.

On Thursday, an industry source said Saudi Arabia halted crude shipments to the new unit until at least mid-July. State oil firm Saudi Aramco, the other co-owner of the plant, had ramped up supplies to the plant this year to feed the new unit, the cornerstone of its five-year, $10 billion expansion.

Aramco would evaluate restarting shipments after that depending on the status of the refinery.

"The outage of the new crude unit may continue for several months, while the causes of the issue are established and rectified," Shell said in a statement late on Wednesday.

Sources said the new crude distillation unit, which began production in April and was shut following a June 9 fire, may be idle for up to a year to repair extensive corrosion found in the unit -- up from initial estimates of two to five months.

Shell said all secondary units built as part of the five-year, $10 billion project were fully operational, although some were running at reduced throughput.

But sources familiar with operations said one of the new units -- a catalytic feed hydrotreater that removes sulfur from feedstock going to the refinery's gasoline-producing fluidic catalytic cracking unit -- would but shut down this week because of a lack of feedstock from the idled crude unit.

The sources also said Motiva was shutting an older catalytic reformer, which creates gasoline additives.

Motiva officials were not immediately available to comment on details of the secondary unit operations. In the statement, Shell said the refinery's original 285,000 bpd complex was operating "as per plan."

Motiva's Port Arthur refinery is not shutting the refinery's FCC, but will emphasize production of diesel, which is yielding higher returns for U.S. refiners as an export, the sources said.


The reduction of supplies from Saudi Arabia comes after the kingdom ramped up shipments to the refinery, in part to build up inventories before the expansion started up. Saudi Arabia could cut shipments by up to three Very Large Crude Carriers per month, or roughly 200,000 bpd, industry and shipping sources said.

Motiva imported 315,000 bpd of Saudi crude in the first quarter, a 112,000-bpd increase from the year before, according to Reuters calculations based on U.S. government data.

A spokeswoman for Shell, which has been handling queries on behalf of Motiva, said she could not comment on refinery operations or crude oil supplies for "competitive reasons".

"However, regarding how this will impact crude supply and making of products, Motiva is well positioned to manage the supply of crude and products and is working effectively with both owners," the spokeswoman said.

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