By Barbara Powell
Motiva Enterprises LLC’s Port Arthur, Texas, refinery, may keep its largest crude unit offline because vessels able to transport its output of vacuum gasoil are in tight supply, a person familiar with operations said.
The 325,000-barrel-a-day crude unit, stopped since an Aug. 17 fire damaged a hydrocracker that normally processes the gasoil, may stay idle as long as Motiva can’t find an outlet for the intermediate feedstock, said the person, who asked not to be identified because the information isn’t public.
Double-hulled vessels required by U.S. environmental regulations to ship crude and products are in short supply, the person said. This could keep the refinery operating at less than half its 600,000-barrel-a-day capacity during the two to six weeks estimated for the hydrocracker repairs.
Draining supplies: Refinery crude demand rises to highest in eight years
American-flagged tankers and barges, needed to move cargo between U.S. ports, are in high demand to ship Eagle Ford crude from Corpus Christi to refineries the Houston and New Orleans areas. Production from shale formations in south Texas and North Dakota has boosted domestic oil output this month to the highest level since November 1989.
“It’s extremely tight,” said Kevin Sterling, a senior analyst with BB%T Capital Markets in Richmond, Virginia. “Barges are running full throttle between Corpus Christi and Houston to the Gulf. It’s going to stay tight for the foreseeable future.”
Utilization rates above 90 percent and shippers’ increasing use of long-term contracts on barges have contributed to the scarcity, Sterling said.
Even before the Aug. 17 hydrocracker fire, Port Arthur production had been curtailed since an Aug. 12 blaze in a sulfur recovery unit’s reactor. The refinery is operating four nearby hydrotreaters and three lube units at lower rates while the sulfur unit is shut for repairs estimated to take as much as two weeks, the person said.
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Destin Singleton, a Houston-based spokeswoman for Motiva, said today that the company hasn’t provided an update on the status of the Port Arthur units. The refinery has said there was an “operational issue” Aug. 17 and that while repairs are being made, several integrated units will run at reduced rates and others are being shut down.
The hobbling of Motiva Port Arthur’s output comes as Motiva’s 255,000-barrel-a-day Convent, Louisiana, refinery is operating at reduced rates. The Convent plant in South Louisiana west of New Orleans may have to keep a crude unit shut for a month after an Aug. 19 fire, a person familiar with operations said yesterday, who asked not to be identified because the information isn’t public.
Motiva is a joint venture between refining units of Royal Dutch Shell Plc and the Saudi Arabian Oil Co., known as Saudi Aramco.
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