September 12, 2012:

The Lisichansk refinery, controlled by Anglo-Russian oil producer TNK-BP, has attracted interest from a number of buyers, one of the company's major shareholders, German Khan, told reporters on Wednesday. TNK-BP, half owned by BP, has long been struggling to improve margins at the 140,000 barrels per day refinery, asking the Ukrainian government to impose import tariffs or quotas on fuel to help boost its profitability. The company halted production at the plant in March. "We are in discussions to sell the Lisichansk refinery, there are some offers, we are in talks" Khan, who is also TNK-BP's executive director, told reporters. In July, administration of the Lugansk region where the refinery is located said Ukrainian magnate Dmytro Firtash was involved in talks about the Lisichansk plant. TNK-BP is at the centre of controversy after BP said in June it would start the process of selling its 50 percent stake in the company, which it formed nearly a decade ago with a group of Russian tycoons called AAR. In July, BP entered a 90-day period to talk to potential buyers including AAR and Russia's top crude producer Rosneft . Khan declined to comment on the potential TNK-BP stake sale.

By Reuters

September 12, 2012:

RICHMOND (KCBS) – Federal investigators with the U.S. Chemical Safety Board continue to conduct tests as they try to figure out what sparked a fire at Chevron’s Richmond refinery last month. Inspectors outlined their preliminary findings at the Richmond City Council meeting on Tuesday night. Although investigations are still ongoing, they said that they are learning more about the section of pipe that leaked and sparked the fire.  U.S. Chemical Safety Board Western regional manager Don Holmstrom said the five-foot long section of pipe that failed has been removed for further testing. “Adjacent to that failure point, the pipe had greatly thinned,” he said. “In post incident measurements, those surviving sections had a wall thickness as low as about 1/16 of an inch.” He said the original pipe thickness was 5/16 of an inch.

Chevron refinery manager Nigel Hearne said the company takes full responsibility for what happened. “I would like to show some recognition of fear and anger that I see demonstrated in the community. I hink that’s appropriate,” Hearne said. Investigators said that some nearby pipes were inspected in November of last year and now they want to know why the line that failed was not.

By CBS Sanfransisco

September 12, 2012:

Brazil may extend the deadline for Venezuelan state oil firm Petroleos de Venezuela S.A. to provide loan guarantees and secure its participation in the bi-national Abreu e Lima heavy-oil refinery, the CEO of Brazilian state-controlled energy company Petrobras said. Maria das Gracas Foster said PDVSA is in the "final" phase of securing a loan needed to pay for its 40 percent stake in the refinery, although the November deadline is approaching. "If they don't present the guarantees in November, I'm going to discuss a new deadline because I want them (PDVSA) to be a part of this project," Foster said in a Senate hearing. The two companies agreed in 2005 to jointly build the 230,000-barrel-per-day refinery in the northeastern Brazilian state of Pernambuco. According to the joint-venture terms, Petrobras is to have a 60 percent stake and PDVSA the remaining 40 percent. Petrobras began building the refinery in 2007 with its own funds while waiting for PDVSA to assume its portion of a loan extended by Brazilian state development bank BNDES to finance the project.

BNDES has thus far denied the loan to PDVSA due to lack of sufficient collateral. Petrobras has set different deadlines for its joint-venture partner to meet its component of the financing arrangement and the next one expires in November. For PDVSA to participate in the project, it must acquire a 40 percent stake in Abreu e Lima, assume responsibility for that same proportion of the BNDES loan to fund the project and cover 40 percent of the costs Petrobras has already incurred in the construction phase. Foster also denied reports by the controller general's office that the cost of the project has spiraled far above what was included in the initial budget. Foster, who took the helm of Petrobras in February, said the higher price tag is due to mistakes made thus far, exchange-rate fluctuations and the fact the budget did not include the interest the companies must pay on the loan. According to the U.S. Energy Information Administration, Petrobras plans to increase its Brazilian refining capacity to more than 3.1 million barrels per day by 2020 to meet rising domestic demand.

Abreu e Lima is one of five new refineries the company will build to achieve that objective, the EIA said in a report earlier this year. EFE

By FoxNews

September 12, 2012:

SAN FRANCISCO— A corroded pipe that failed and triggered a leak and massive fire at one of California’s largest refineries had walls as thin as a penny in some areas, federal investigators said. U.S. Chemical Safety Board officials said late Tuesday that a key part of their probe into the fire at the plant in Richmond, Calif., is why Chevron Corp. didn’t replace the pipe during a routine inspection a year ago. The board previously found that Chevron had inspected and replaced a larger, corroded 12-inch pipe connected to the smaller one that failed Aug. 6. “We have obtained internal Chevron policies that recommend that every segment of pipe in this service should have been included in the pipe inspection program,” said Don Holmstrom, lead investigator for the board. “There is no indication that this segment of pipe was inspected for thickness during the most recent” inspections. Chevron did not respond to a request for comment.

The blaze at the San Francisco Bay area facility knocked an important refinery unit offline, reducing production. Gas prices on the West Coast have surpassed $4 a gallon since the fire. In addition, smoke from the blaze sent thousands of residents to hospitals with health complaints. Local officials have moved to create more thorough air monitoring around refineries in the area along with better emergency response systems. The destroyed unit remains offline, and the company has provided no timetable for when it might be rebuilt. Parts of the failed, eight-inch pipe had thinned to 1/16 of an inch from its original thickness of 5/16 of an inch, officials said. “This represents about an 80 percent wall loss from the original design thickness,” Holmstrom said. The pipe that failed dated back to the 1970s, the board said, and Chevron’s own training documents said straight pipes such as the one that leaked were more susceptible to corrosion. “Understanding the decision-making around the replacement of the eight-inch pipe remains a key focus of the investigation,” Holmstrom said.

Engineering experts said the company should have done thorough inspections of connected pipes after it found corrosion and thinning in nearby pipes in the crude unit last year. “If you find local (pipe) wall loss, you don’t just stop there, you extend the inspection further until you find out whether the rest of the pipe is safe to operate,” said Ronald Haupt, a mechanical engineer and president of Pressure Piping Engineering Associates Inc.

By FuelFix

September 12, 2012:

RICHMOND -- Portions of the 8-inch carbon steel pipe whose failure triggered last month's major fire at the Chevron refinery had thinned to about the thickness of a penny before leaking 600-degree diesel oil, federal investigators told the City Council this week. The U.S. Chemical Safety Board also revealed that the deteriorating pipe apparently was not inspected by Chevron during a maintenance shutdown last year. What caused the corrosion and why the pipe had not been replaced during maintenance work on the unit in November are key lines of inquiry, according to Chemical Safety Board officials. "We want to understand Chevron's decisions," said Don Holmstrom, the agency's western regional manager. Holmstrom said Chevron's internal policies suggested that an inspection of the pipe should have occurred, but the pipe that later failed "doesn't appear to have been inspected." Pipe thickness is typically measured by ultrasound technology, CSB Managing Director Daniel Horowitz said.

Holmstrom and Horowitz were joined at the council meeting by CSB Chairman Rafael Moure-Eraso. The investigators said they and officials from the state Division of Occupational Safety and Health took joint custody of a 5-foot section of pipe from the Aug. 6 fire and turned it over to a metallurgical lab for "failure analysis testing." Parts of the pipe had thinned to one-sixteenth of an inch, down from an original thickness of five-sixteenths of an inch CSB officials have said previously that the pipe may have been in service since the 1970s. During the November maintenance work, Chevron decided to replace nearby lines within the No. 4 crude unit of the refinery but did not inspect the section that later failed, safety board officials said. Chevron spokesman Derek Jansen on Wednesday declined to say whether the pipe was inspected in November. "We adhere to all applicable laws and regulations and cooperate with all inspections," Jansen wrote in an email. "The investigation is ongoing, and it will take time before all the facts are known about the incident."

Officials also broadcast for the first time Tuesday surveillance video showing the formation of a large white vapor cloud shortly before the fire sparked. The meeting was the first CSB presentation since Chevron released a 30-day report last week revealing there was a "flash fire" extinguished about 10 minutes before the larger fire. Chevron's report also raised questions about the composition of a white cloud that formed minutes before the large fire. Chevron suggested that the cloud was mostly steam rather than combustible vapors, as previous CSB statements indicated. Before Tuesday's briefing, Horowitz said safety board investigators and Chevron officials met this week to discuss the composition of the vapor cloud, but that Chevron's report and the CSB's early pronouncements about the cloud are not necessarily at odds. "It's more complex than that," Horowitz said. "But there is no dispute that there was a large release of hydrocarbons" before the fire.

The question of the vapor cloud looms large in part because more than a dozen refinery workers were in the cloud and evacuated minutes before the fire, narrowly escaping serious injury or death. "When this vapor cloud erupted, there were at least 18 employees in it," Holmstrom said. CSB officials also called on the public to share photos and videos of the cloud to help with modeling analysis to better understand its composition. The Aug. 6 fire sent black smoke across the East Bay, resulted in minor injuries to six refinery workers and sent more than 15,000 people to area hospitals complaining of illness. Tuesday's briefing was the latest in a series of news conferences and other communications from the CSB, an investigatory agency with no regulatory power. Mayor Gayle McLaughlin asked CSB officials to provide the public briefing Tuesday. Safety board officials vowed to continue to be "transparent" about their findings as the investigation continues. Greg Karras, senior scientist for Communities for a Better Environment, said the biggest news Tuesday was the revelation that the corroded pipe may have eluded inspection in November. "The pipe was way beyond the minimum thickness," Karras said. "Not only was it not replaced, but the CSB can't find evidence that it was even checked." Top Chevron officials were also on hand Tuesday. Refinery General Manager Nigel Hearne addressed the council after the CSB's presentation.

Hearne apologized for the incident and said he was committed to working with investigators, ensuring that Richmond residents get jobs rebuilding the unit and installing air monitoring systems in nearby neighborhoods.  "We are dedicated to learning from this," Hearne said. 

By Mercury News