By Erwin Seba
PORT ARTHUR, Texas, June 25 In the end, all it
took was a small chemical spill -- perhaps less than a barrelful
-- to bring down the newest, mightiest oil refinery in the
Three weeks ago, while workers repaired a minor leak at the
Port Arthur, Texas plant owned by Motiva Enterprises,
a few gallons a day of so-called "caustic" was inadvertently
seeping into the newly built crude distillation unit (CDU), the
30-story-high network of interconnected cylinders and latticed
pipelines at the heart of the refining process.
While harmless when mixed with crude, the undiluted caustic
vaporized into an invisible but devastating agent of corrosion
as the chamber heated up to 700 degrees Fahrenheit (370
Celsius); the chemical gas raced through key units, fouled huge
heaters and corroded thousands of feet of stainless steel pipe.
Now, just weeks after they commissioned the biggest U.S.
refinery project in a decade, two of the world's biggest oil
titans -- Royal Dutch Shell and Saudi Aramco
, which own Motiva -- are rushing to repair the
potentially billion-dollar glitch that has added an embarrassing
and costly coda to a landmark $10 billion expansion.
After a five-year effort to double the plant's capacity,
making it the largest in the country, they must now reassemble
many of the same people and parts for a blitzkrieg fix that may
exceed the original $300 million cost of the unit: corrosion
experts are flying in from across the world; hundreds of workers
are being hired; bespoke 30-inch (75-cm) stainless steel
pipelines and 30-story cranes may need to be obtained quickly,
according to sources involved in the repairs.
Sources familiar with the effort provided Reuters with the
most detailed account yet of what officials believe went wrong
at the 325,000-barrels-per-day (bpd) unit known as vacuum
pipestill-5 (VPS-5), showing how a series of seemingly minor
glitches crippled the vast plant.
TOO HOT TO HANDLE
Motiva has said little about the incident. Late on
Wednesday, 11 days after it occurred, the company confirmed for
the first time that the unit might remain shut for "several
months". Sources say officials are telling workers that the unit
could be idle for as long as a year.
On Friday, in response to Reuters questions, Motiva
spokeswoman Kayla Macke confirmed the contamination: "The
preliminary inspection indicates that parts of the new unit have
been contaminated with elevated levels of caustic."
The extent of the damage is still not known as portions of
the crude unit are too hot to enter, according to the sources.
Some areas may not be accessible for weeks.
Motiva has not reached a final conclusion as to the cause of
the damage, but has developed a working theory on what experts
said appeared to be a rare instance of "accelerated chemical
corrosion". The unit's intense heat was critical: the rate of
corrosion can double with every 10 degrees Celsius.
Even as it pitted the inside of the atmospheric section, a
giant still that performs the initial and most basic stage of
converting crude oil into fuel, the damage went undetected. Only
when two fires broke out and a heater ruptured -- once crude
resumed flowing -- did operators suspect something was amiss.
"They had the first fire and then they had the second one 20
feet away. They knew they had a problem," one of the sources
Why caustic continued flowing into the unit while it was
idled to repair an unrelated leak is unclear, and is a key part
of the investigation to establish cause. It is thought a valve
failed to shut completely, but why that happened is unknown.
Meanwhile, every day the unit remains shut is an estimated
$1.5 million in profit margin that Motiva isn't earning, and
another 144 million miles (230 million km) worth of gasoline
that isn't being supplied to the U.S. market during the height
of the driving season.
As for oil prices, the incident will have a mixed effect.
Unless it cuts production, Saudi Arabia will have to find new
buyers for the crude that was earmarked for the refinery,
weighing on oil prices. But the premium on regional wholesale
gasoline may be pushed higher by the prolonged loss of supply,
which should help buoy profit margins at rivals such as Valero
While Motiva has been spared the kind of tragedy that struck
BP Plc's Texas City, Texas refinery in 2005, when 15
workers were killed and 180 injured in a vapor cloud explosion,
the Port Arthur incident will likely stand as one of the most
surprising to hit the U.S. refining industry in modern times.
The 4,600-acre (1,850-hectare) Port Arthur complex sits on a
storied site. The first oil discovered in Texas was found 15
miles north of the plant in 1901; the state's first refinery was
built on the Motiva site in 1903. A half-dozen other
petrochemical complexes have given this Gulf Coast city a
reputation as one of the most polluted in the country.
On May 31, with banners over a ceremonial industrial valve,
Royal Dutch Shell Chief Executive Peter Voser and Aramco CEO
Khalid Al-Falih celebrated the completion of a difficult
project. The expansion began in 2005 but stalled in 2009 as
markets tanked. It eventually ran $5 billion over the initial
budget, and came in two years behind its original schedule.
"Rather than cut and run, we pressed ahead with our
long-term commitment," Al-Falih said of Aramco's faith in the
project, which he described as the company's largest investment
outside Saudi Arabia. "We're confident the return on investment,
despite the cost, will be very healthy."
With a total capacity to process 600,000 barrels of oil
every day, the plant consumes more crude than the five-state,
Rocky Mountain region. It can make 6 million gallons (23 million
liters) of gasoline daily, enough to drive around the equator
some 6,000 times, assuming 25 miles per gallon.
By the end of May, the critical new units at the site had
been running for about six weeks, enough time, officials
thought, to address the usual teething pains and hiccups that
often afflict massive new industrial complexes.
For example, the plant's new gasoline-and-diesel-making
75,000 bpd hydrocracker unit had reported flaring -- meaning it
burned off hydrocarbon liquid and gas through a tower to relieve
pressure in the system -- on May 28 because the wires for a
temperature gauge were crossed, causing incorrect readings.
The hydrocracker again malfunctioned on Saturday with a
chain of overpressures that required flaring and a brief
interruption to production, according to sources.
"You've got to be prepared for something to happen," said
John Auers, senior vice president of Turner, Mason and Co, a
Dallas refining consultancy. "There will always be issues with
startup, and this was the biggest startup in U.S. history."
But only two days after the ceremony, on June 2, authorities
decided to halt production temporarily to search for a leaking
valve that was allowing vapor to escape from the crude unit,
sources said. It was thought to be a minor problem.
It took nearly a week finally to stop the leak. Originally,
it was thought a few bolts required tightening. Instead, clamps
had to be set in place to secure the leak, the sources said.
During that week the unit was kept out of production, but it
wasn't completely shut down, which would have allowed the unit
to go cold and taken longer to restore production.
While Motiva's VPS-5 was idling, authorities believe a few
gallons each day of caustic leaked into the unit. The caustics
are a base meant to negate the acid in cheaper heavy, sour crude
that the new CDU was made to consume. They prevent residue from
blocking pipes and reducing crude intake.
Normally, the amount leaked in the CDU would have been
harmless, diluted by the crude. But only a small amount of
hydrocarbon was circulating through the still while it was out
of production, the normal method to maintain so-called "warm
circulation" during a brief shutdown.
By the following weekend, unaware of the caustic incursion,
Motiva began reheating the unit to resume operations; as the
temperature reached 300 to 400 Fahrenheit, the caustic
Ground zero was the atmospheric section, one of the simplest
but most important machines in a modern plant. Although vast in
scale, today's units are in many ways similar to the simple
stills used to convert crude into kerosene for lamps at the
start of the U.S. oil industry in the 1850s.
The core of any refinery, the main still boils crude at
intense temperatures to split the hydrocarbon molecules into the
initial components of fuels such as gasoline and diesel; the
bulk of the output is an intermediate feedstock that requires
further refining in a host of specialized secondary units.
Unlike a refinery blast, the misfortune unfolding at Motiva
was relatively slow to materialize. The fires that erupted from
small pipeline cracks that Saturday were small enough to be
quickly extinguished by the workers on hand at the crude unit.
The extent of the damage was understood within two days.
"We have the worst-case scenario," one of the sources said.
"Extensive damage throughout the crude unit. All of it."
Three engineering experts agreed that what one called
"accelerated chemical corrosion" was rare, but not unheard of.
"The temperature issue could be a factor as well," said
Kevin Garrity, president of NACE International, a global
organization for engineers studying corrosion, and a 38-year
veteran of the industry. He compared the effect to pouring sugar
into hot tea, which dissolves the crystals much more quickly
than in a cup of cold tea.
Normally, corrosion problems can be prevented.
"From a general sense you would not expect this kind of
deterioration and problems in such a short period of time. You
might not even expect it in 30 years if you have the right
combination of technology and inspection practices," he said.
Motiva has yet to examine the fractionation towers -- tall,
thin, metal columns -- as well as the main part of the
atmospheric section, because they are still cooling from their
operating temperatures, said sources recruited for the repair
The vacuum section of the VPS-5 -- which takes the heaviest
"residue" created in the atmospheric section and refines it in a
vacuum, increasing the yield of feedstocks for other units --
was not damaged, they said.
Operators have continued to run many of the unharmed
secondary units, although without the crude tanks they must buy
intermediate feedstock from other refiners or shut peripheral
units, as Motiva did last week.
But stainless steel piping, some sections as large as 30
inches in diameter, was damaged. Such equipment, part of more
than 700 miles of pipe used on the expansion project, is often
built to order, and may be difficult and costly to replace.
"If someone has 30-inch stainless steel pipe for sale, I
would guess they're going to charge a premium price," one of the
Instrumentation on the unit is also known to be damaged,
according to the sources.
Up to 50 heat exchangers will need to be cleaned throughout
portions of the new plant, according to IIR Energy, an
industrial intelligence firm that gathers data on operations and
project activity on thousands of assets globally.
Work on exchangers 300 feet (90 meters) above the ground
will require large cranes, though likely not the giants needed
for the original construction. The heat exchangers, which look
like 30-foot-long cylinders collected in a metal frame, house
lengths of tubing where feedstocks are warmed and refined
products are cooled as they go to and from a refining unit.
IIR also told Reuters that all trays in the distillation
column and components within the furnace would need to be
replaced. It said no restart timeframe had been determined.
Soon the question of who is to blame will arise. The cost to
complete repairs may be as much as replacing the whole unit,
which was originally estimated to cost some $300 million when
the project was launched in April 2005, according to IIR.
Without knowing exactly why the caustic leaked, it's not
possible to say who, if anyone, is at fault. The two main
contractors for the project -- Bechtel and Jacobs Engineering
-- declined to comment.
Meanwhile, the investigation continues, and oil traders
await any word on when the plant will resume operations. Motiva
will likely be "extra-cautious" in restarting, Auers of Turner,
Mason and Co said.
"They're really focused on the repairs," one of the sources
close to refinery operations said. "They don't need to know the
cause now. They've got 12 months to figure that out and fix it."