February 13, 2020:

After months of uncertainty following a massive explosion and subsequent bankruptcy, the site of the shuttered South Philadelphia refinery complex has new life and new ownership under a Chicago-based developer, expected to become official Thursday. And, for the first time since the 1860s, the area may not be used for refining oil. Here’s a primer on the past and future of the fire-ravaged Philadelphia Energy Solutions complex, which once served as the East Coast’s largest oil refinery.

The refinery property is larger than all of Center City.

The 1,300-acre property — Philadelphia’s largest available commercial real estate parcel — actually consists of two refineries previously acquired by Sunoco: one in Point Breeze and another, larger refinery at Girard Point. With easy access to the Schuylkill River, railroads, and roadways, the site has been used for petroleum refining for more than 150 years. The announcement of its sale raised hopes among urban planners, environmentalists, and the refinery’s neighbors that a new, cleaner use can be found for a large property at Philadelphia’s southern gateway.

A Chicago-based real estate firm will redevelop the site.

Though more than a dozen companies initially lobbied for the refinery’s land, the expected winning proposal was submitted by Chicago-based Hilco Redevelopment Partners. Hilco’s $252 million bid promised “billions of dollars of investment into the site to transform the debtors’ business from a destroyed refinery complex to a mixed-use industrial site.” Hilco, which has vowed to move quickly to clean up the heavily-contaminated site, beat out an aggressive effort by retired PES chief executive Philip Rinaldi and a California-based development group to buy and restart the bankrupt refinery.

Unsecured creditors also fought Hilco’s plan in court, saying they are likely to receive only a small portion of the more than $1 billion they are owed while the refinery’s executives reap “bogus” bonuses.

The refinery shut down following a June 2019 fire and declared bankruptcy in July.

In the early morning hours of June 21, 2019, a flammable-liquid leak triggered a fire at the refinery, leading to three successive explosions. The largest explosion, whose heat was detected by satellites in space, shook South Philly and launched pieces of a fuel tank — some as as large as trucks — careening across the complex. The blast released about 5,239 pounds of deadly chemicals — including 3,271 pounds of hydrofluoric acid — into the air. If contacted, hydrofluoric acid can cause destruction to deep tissue layers and bone. If inhaled, it can cause severe lung injury resulting in death. Five workers experienced minor injuries in the inferno, but the already-struggling refinery complex took an unrecoverable hit. A month after the explosion, PES declared Chapter 11 bankruptcy.

Timeline of a Near Disaster

Friday, June 21

4:00 a.m.: Flammable process fluid containing hydrofluoric acid leaks from the refinery’s alkylation unit, forming a ground-hugging vapor cloud.

Vapor cloud

4:02:06: The vapor cloud ignites, causing a large fire.

4:02:37: A control room operator empties most of the hydrofluoric acid in the alkylation unit into a safety storage drum.

4:15: An explosion occurs in the alkylation unit, followed by a second explosion four minutes later.

The aftermath

Philadelphia Energy Solutions refinery estimated that 3,271 pounds of hydrofluoric acid was released to the atmosphere. If contacted, hydrofluoric acid can cause destruction to deep tissue layers and bone. If inhaled, it can cause severe lung injury resulting in death.

Five workers experienced minor injuries during the incident, requiring first aid treatment. The U.S. Chemical Safety and Hazard Investigation Board says it is unaware of any health impacts from the hydrofluoric acid release either within or outside of the refinery. This is the second time the refinery has filed for bankruptcy in two years. Going through three owners since 2012, the PES refinery has a struggled financially for years. It first filed for bankruptcy in January 2018. PES was formed in 2012 by Carlyle Group and Sunoco Inc. to rescue the facility. But, led by banks that were former creditors, the refinery slumped under heavy debt as cash reserves dwindled and the company scrambled to conserve resources. PES is the fourth Philly-area refinery to shut down in the last 10 years. Only three refineries remain near Philadelphia: PBF Energy Inc. plants in Paulsboro, Gloucester County, and Delaware City, Del., and the Monroe Energy Refinery owned by Delta Air Lines in Trainer, Delaware County.

The sale to Hilco could still face legal challenges. Just days before the refinery exploded in June, ICBC Standard Bank PLC lent PES millions of dollars to purchase petroleum. Now, the bank is engaged in a bitter struggle with other lenders over its rights to the refinery’s unpaid insurance claims. That litigation is expected to take a long time to settle.

By The Philidelphia Inquirer

February 13, 2020:

A fire broke out overnight at Exxon Mobil Corp.’s Baton Rouge oil refinery in Louisiana, halting production at the fifth-biggest fuel-making plant in the U.S. The outage at the massive complex — which supplies fuel products across the southeast U.S. and all the way to New York Harbor — means the refinery needs fewer barrels of crude oil, depressing a market already reeling from the coronavirus crisis in China. But it could help ease a gasoline glut in the Gulf Coast, where stockpiles hit a record in late January. The blaze erupted in a natural gas line, affecting first one and then all of the facility’s crude distillation towers — which heat and break down raw oil into products — according to people familiar with operations. As a result, other units such as the catalytic cracker and the chemical plant had to cease operations. The fire has been extinguished and there were no injuries, according to Exxon. Operations continue at the refinery and chemical plant, spokesman Jeremy Eikenberry said in email. Industry consultant Genscape Inc. said in a report Wednesday that its monitors detected that all crude sections as well as a catalytic reformer at the plant are shut. The facility is located along the Mississippi River about 80 miles northwest of New Orleans and accounts for about 15% of the refining capacity in Louisiana. The local WAFB TV station’s website showed images of the fire, and said local people reported their houses being shaken by the incident. There was no initial off-site impact to air quality, or an immediate call for an evacuation of the nearby area, WAFB said. The complex’s chemical plant has shut, including its olefins unit — which takes feedstocks such as naphtha, butane, propane and ethane from the oil refinery and converts them into ethylene and propylene that are used to make plastics. The facility can process more than 500,000 barrels of crude a day, according to data compiled by Bloomberg.

Gasoline in the Gulf Coast spot market rose 1.13 cent per gallon to an 8.13-cent discount to Nymex Rbob futures Wednesday morning. Exxon is in the process of a massive expansion of the plastic-ingredient capacity on the chemical side of the Baton Rouge complex that’s scheduled to begin output next year. The combined refining and chemical operations account for one in every 10 jobs in southwest Louisiana region, according to the company. U.S. refineries handled an average of about 16.5 million barrels a day of crude so far this year, Energy Information Administration data show.

By Bloomberg

February 13, 2020:

State-run ChemChina has joined Chinese refining peers in slashing output as the coronavirus epidemic cuts fuel demand, three people with knowledge of the matter said on Thursday, lowering production by around 100,000 barrels per day (bpd). The cuts by ChemChina, formally known as China National Chemical Corp, take total reductions by refiners in the country, including state majors Sinopec, PetroChina, CNOOC as well as independent plants, to some 1.5 million bpd over just two weeks.  ChemChina [CNNCC.UL] switched off the 5 million tonnes per year crude oil unit at Zhenghe refinery in Shandong province on Wednesday, two of the sources said. All of the people with knowledge of the matter declined to be identified because they’re not authorized to speak to the media. Previously the Zhenghe plant, in Dongying, was operating at 70% of its capacity, the sources said. The company also reduced operating rates at two other plants in the province - Changyi and Huaxing - to 60% earlier this week from 70% previously. The two plants have a combined crude processing capacity of around 300,000 bpd. Combined, ChemChina’s throughput cuts are equivalent to 100,000 bpd, according to Reuters’ calculations.

ChemChina did not immediately respond to an email seeking comment. “As refining crude oil has turned into a loss-making business, (it’s) better to store crude oil instead of refining it,” said one of three sources who has direct knowledge of ChemChina’s refinery operation. ChemChina has diverted some crude oil cargoes which were supposed to arrive in China to floating storage near Malaysia as well as storing oil in tanks in Shandong, the person said. Shi Linlin, senior refinery analyst with consultancy JLC Network Technology, said independent plants in Shandong are under tremendous pricing pressure in marketing fuel, especially in the case of gasoline. Ex-plant gasoline prices have dived by up to 1,000 yuan ($143) per tonne in less than three weeks, or nearly 20%, Shi added.

By Reuters

February 13, 2020:

According to Reza Padidar, 75 percent of the 3300 private companies active in the oil industry’s downstream sector are currently idle, while this capacity could be used in creating added value in the country’s oil industry.  “Believing in the private sector, trusting and crediting their potentials and capability will save the national economy,” Padidar told IRNA.  He stated that one of the major goals that the oil ministry is pursuing by signing various oil contracts with domestic contractors is to create activity in the country’s productive sector, adding that “the goal is to keep production units at least semi-active, given the stoppage in production.” “Oil is an advantage for the Iranian economy and we must strive to transform the potentials of the oil sector into a dynamic economy for development of the country,” he added. Increasing the country’s petro-refining capacity has recently become a hot topic among Iran’s top research institutions as a key defense mechanism against the impacts of the U.S. sanctions on the country’s oil industry. Back in June 2019, the Research Center of Iran’s parliament said in a report that petro-refineries are two times more profitable than refineries and suggested that National Iranian Oil Company (NIOC)’s new refinery projects be defined as petro-refineries. The report dubbed “Petro-refineries, their role in competing the oil value chain and the status in Iran’s oil industry” stated that constructing petro-refineries is one of the most important ways to alleviate severe economic impacts of price fluctuations and achieve a much higher margin of profit.

By Tehran Times

February 12, 2020:

Restarting Exxon Mobil Corp’s 502,500 barrel-per-day (bpd) Baton Rouge, Louisiana, refinery after an early morning fire will depend on how quickly natural gas supply can be restored to the crude distillation units (CDUs), said sources familiar with plant operations. The fire broke out in a natural gas pipeline supplying the units before midnight on Tuesday, the sources said. The fire was put out on Wednesday morning, the company said. No injuries were reported. Exxon had made preliminary plans to restart the Baton Rouge refinery’s large CDU, the 210,000 bpd PSLA-10, before the fire was extinguished, the sources said. The unit cannot be restarted until the natural gas supply is restored. Most of the refinery’s units, including the three CDUs, were shut early on Wednesday, the sources said. Exxon spokesman Jeremy Eikenberry declined on Wednesday to discuss the status of units at the refinery. He did say operations were continuing at the refinery and adjoining chemical plant. Eikenberry also said Exxon would continue to meet its contractual commitments. The 210,000-bpd PSLA-10 CDU is the largest of three at the refinery doing the primary conversion of crude oil into hydrocarbon feedstock for all other production units. The natural gas is used to operate the units as they breakdown crude oil.  One of the two 110,000-bpd gasoline producing fluidic catalytic cracking units (FCCUs) continues to operate at a minimal production level while one of the light ends units is also operating at minimum rates, the sources said. The Baton Rouge refinery is the second-largest in Louisiana and the fifth-largest in the United States by capacity. It is Exxon’s second-largest refinery in the nation.

By Reuters