By Erwin Seba
HOUSTON, June 21 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
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.