August 30, 2012:

WOODS CROSS, Utah — Buildings, cars and roads are covered with oil after an oil tank spilled in Woods Cross Thursday night. The incident occurred at the Holly Refinery. A spokesman for the refinery says the tanks built up too much pressure, causing a break and releasing a spray of oil. The spray covered an area about 40 yards wide and about half a mile long. The heavy fuel oil was kept at a high temperature to keep it in liquid form. There is still an investigation under way to determine what caused the tank to rupture. “We’re guessing that somehow there is some water that got into the tank,” said Mike Astin, spokesman with Holly Refinery. Astin said the temperature of the oil is above the boiling point for water, so water would have vaporized immediately and cause the change in pressure that made the tank fail. He said this is what they speculate happened.

No one was hurt, but the oil coated a trailer park and an area southeast of the refinery near 500 South and I-15. The refinery is handling the cleanup. The refinery was out power washing places the oil had landed and the Utah Highway Patrol assisted in making sure the oil was removed from the road ways.

By Fox13Now

August 29, 2012:

Venezuela is carrying out an “exhaustive” inspection of its biggest refinery before attempting to restart processing after extinguishing a four-day fire yesterday caused by an explosion that killed 48 people. State-owned Petroleos de Venezuela SA is “in no hurry” to restart the Amuay refinery and will allow for at least a one-day cooling-down period, Oil Minister Rafael Ramirez told reporters yesterday in Falcon state near the plant. PDVSA, as the company is known, continues to export oil and petroleum products stored at Amuay’s dock and sees no disruption to its internal or external shipping obligations, Ramirez said. New York gasoline futures have retreated the last two days after nearing a four-month high Aug. 27 amid concern the shutdown threatened product supplies as U.S. Gulf Coast plants halted operations with Tropical Storm Isaac heading toward the region. “We’re carrying out a cooling process of all areas that suffered intense heat generated by the fire,” Ramirez said. “Because we are dispatching, because we have sufficient storage, because we have all our plants in perfect shape, we have no need to hurry to re-activate an operation.”

Production may restart in two to three days, Jesus Luongo, head of the Paraguana refining complex said on state television yesterday. Strong winds could cause the fires to reignite and if that happens firemen will use foam to extinguish them, he said.

Hercules Planes

Hercules cargo planes were used to help extinguish flames on two storage tanks at Amuay Aug. 27. A blaze at a third tank flared up at least twice yesterday before being contained. A gas leak that formed a cloud at the refinery exploded at 1:10 a.m. on Aug. 25, sending a ball of flame into the air and destroying a National Guard post and damaging about 500 homes. President Hugo Chavez, who faces elections in October, declared three days of mourning and ordered an investigation. Amuay, which has the capacity to process 645,000 barrels a day, is part of the Paraguana complex 240 miles west of Caracas. While Ramirez described the situation as “chaos with fires everywhere” when he first arrived on the scene Aug. 25, he said damage was limited to 9 of 686 storage tanks. Venezuela has stockpiles of 4.2 million barrels of gasoline and other petroleum products and continues to produce 735,000 barrels of the motor fuel a day at plants, including nearby Cardon, according to Ramirez. PDVSA shipped five tankers carrying 876,000 barrels of crude from Paraguana on Aug. 26, he said yesterday.

‘10 Days’

“This gives us 10 days of inventory,” Ramirez said. “On top of that, the inventory presupposes you aren’t producing anything. There’s no way we can have a problem.’ PDVSA’s benchmark dollar bonds have risen 1 cent to 88.95 cents on the dollar since markets opened after the explosion. The yield on the Caracas-based company’s 8.5 percent bonds due in 2017, with $6.15 billion outstanding, has fallen 28 basis points, or 0.28 percentage point, to 11.38 percent this week. If the fire burned through any piping, instruments or pumps then resumption of production could take longer than PDVSA is estimating, said Kevin Waguespack, vice president of Baker O’Brien, a Dallas-based energy consulting firm.

Extent of Damage

“The longer a fire burns, the greater the possibility for extensive damage,” Waguespack said in an e-mail. “Maybe we’re talking a matter of weeks or a couple of months.” PDVSA is the sole owner and operator of the refinery. The blast is among the world’s deadliest at an oil refinery. Fifteen workers were killed at BP Plc (BP/)’s Texas City refinery in 2005, while more than 50 people died in a fire at Hindustan Petroleum Corp.’s refinery in Visakhapatnam, India, in 1997. Amuay, Cardon and Bajo Grande form the Paraguana complex, which has capacity of about 950,000 barrels a day. That’s second in size to Reliance Industries Ltd. (RIL)’s Jamnagar refinery in India, according to data compiled by Bloomberg. CRP, as the complex is known, supplies 67 percent of gasoline to the local market, according to PDVSA’s website. Luongo, the complex’s general manager, said that while PDVSA has a clear plan for resuming production at Amuay, the time line will change depending on what an inspection of the plant reveals.

Cooling Period

“Based on the technical analysis, we will make the decisions on re-starting the units,” he told reporters yesterday. The cooling period may last into tomorrow, he said today on state television. Stella Lugo, governor of Falcon state in western Venezuela, described the early-morning blast as similar to an earthquake. Lugo told Union Radio on Aug. 27 that the death toll had risen to 48 from a previous estimate of 39. There have been no other official comments about a death toll since Aug. 26.  Gasoline for September delivery slipped 2.41 cents to $3.102 a gallon at 11:50 a.m. on the New York Mercantile Exchange. The contract slid 0.91 percent yesterday after reaching $3.205 on Aug. 27, the highest level since April 30, amid concern the Venezuelan fire and Isaac would curb supplies. PDVSA’s Ramirez said yesterday that the company’s “accurate information” on the Amuay event means that there hasn’t been any variation in oil prices from the explosion and ensuing fires and that Hurricane Isaac has been the main driver. BP and other companies suspended some crude and gas operations in the Gulf of Mexico. The area is home to 23 percent of U.S. oil output and 44 percent of refining capacity, according to the U.S. Energy Department.

Crack Spread

Other refineries that supply the Caribbean could stand to benefit from a prolonged shutdown at Amuay, said Baker O’Brien’s Waguespack. “Refineries that can put product on the water might have a physical advantage, but I would expect most refineries in the general Atlantic Basin would benefit if gasoline shortages become a concern,” Waguespack said. A rising gasoline crack spread, or the profit for refiners for converting crude oil to fuels, “would benefit many plants,” he said. Valero Energy Corp (VLO) and Phillips 66 stand to be the main beneficiaries of a prolonged delay in resumption of production, Brian Youngberg, an analyst at Edward Jones in St. Louis, said in an e-mail. Venezuela, one of the 12 members of the Organization of Petroleum Exporting Countries and South America’s biggest crude producer, had an average output of 2.7 million barrels of oil a day last year, according to BP statistics. Its main export markets are the U.S. and China.

Fourth Largest

Venezuela was the fourth-largest source of crude for the U.S. in May, after Canada, Saudi Arabia and Mexico, at 821,000 barrels a day, based on data from the U.S. Energy Information Agency. Venezuelan product imports from the U.S. nearly doubled in the first five months of 2012 to 38,000 barrels a day from 23,000 in the year earlier period, according to the EIA. They include gasoline, fuel additives and liquefied petroleum gas. After a refinery accident the operator will often turn to its trader to purchase products and cover supply ahead of any spike in prices, Robert MacMinn, a principal at clean product trader CAN-OP based in Thunder Bay, Canada said. “This has played out as ‘refinery upset 101’ from a transparency perspective,” MacMinn said in an interview. “Once a refiner is covered then the full extent of the damage and more realistic repair estimates typically surface. From a trading perspective, full disclosure is problematic until you plug the real or potential supply gap.”

By Bloomberg

August 29, 2012:

Naftna Industrija Srbije AD (NIIS), the Serbian oil and gas company controlled by Russia’s OAO Gazprom Neft (GAZP), said it will invest at least $100 million in its Novi Sad refinery for production of base oils and lubricants. NIS plans annual output of 180,000 tons of base oils and lubricants as of 2015 when it expects to complete the upgrade using technology from Chevron Lummus Global USA, a joint venture of Chevron Corp. (CVX) and Netherlands-based CB&I Lummus BV, NIS Chief Executive Officer Kirill Kravchenko told reporters in Belgrade today. Work on the upgrade may start in 2013, pending shareholders’ approval and a feasibility study to be completed by the end of the year, he said. The resource base for Novi Sad production will be crude from its oil fields in Serbia’s northern Vojvodina province “because the quality is just ideal for making base oils,” Kravchenko said. NIS will finance the upgrade with its own cash, said Nikolas Petri, NIS’s chief of strategic planning. The planned output will comprise some 75,000 tons of naphthenic oils and 105,000 tons of paraffinic oils a year, used for making tyres, plastics, engine lubes and transformer oils.

The intended markets are mostly in southeastern Europe where NIS sees “strong and stable demand” on rising industrial usage, he said.

By Bloomberg

August 29, 2012:

RICHMOND -- California Sen. Dianne Feinstein is calling for a federal investigation into gasoline price spikes that followed a fire at the Chevron oil refinery in Richmond. In a letter sent Tuesday to the Federal Trade Commission, Feinstein said the Aug. 6 blaze that damaged the state's third largest refinery did not affect gasoline supplies as some analysts forecast, yet prices still rose dramatically. Feinstein said the price of gas in the state reached a high of $4.21, more than double the increase seen in average cost of a gallon of gas in the continental U.S. On Tuesday, the average price for a gallon of regular gasoline in California was $4.12, up from $3.86 on Aug. 7. The senator said the spikes "appear to be unjustified by supply and demand fundamentals."

By Mercury News

August 29, 2012:

A fire at a Venezuelan refinery spread to a third fuel tank on Monday, nearly three days after a powerful explosion that killed 41 people and ignited the blaze, the vice-president, Elías Jaua, has reported on Twitter. Hugo Chávez, the Venezuelan president, has angrily denied claims that early warning systems at the country's Amuay oil refinery failed, as locals reported there had been a strong smell of gas before Saturday's deadly explosion in which two refining tanks blew up. An estimated 150 people were injured and 33 remain in hospital. Falcon state governor, Stella Lugo, told Union Radio on Monday that the death toll had risen to 48, but later said the correct number was 41 and that some victims' names had been mistakenly included twice on a list. More than 200 homes were reported damaged by the shockwave. Some were across the street from the refinery, which is on a peninsula in the Caribbean Sea in western Venezuela. Puddles of petroleum mixed with water covered roads in the area. The victims from Saturday's blast included 18 national guard troops. Dozens of people wounded remain in hospital, a national guard general told reporters. People living close to the refinery have spoken of a dense fog-like cloud descending in the days before the huge explosion, which sent a shockwave tearing through the surrounding area, shattering shops and homes and littering the streets with debris.

"The smell of gas could be normal close to a refinery, especially on a windless day like Friday, but [this] wasn't," said Mario Theis, who worked as operations manager in the Amuay complex for more than 30 years. "At the first hint of a gas leak, sirens should go off and all access roads get closed. It didn't happen." But Chávez said: "What you say you heard suggests something that is practically impossible in an installation of this kind, the largest refinery in the world. It is completely automatised and it has thousands of responsible workers here day and night, civilians and military. "There is no way that there could have been a gas leak during three or four days and that no one did anything." Criticisms of the government's response have emerged from local residents as well as oil experts. "What bothers us is that there was no sign of an alarm. I would have liked for an alarm to have gone off or something," said Luis Suarez, a bank employee in the neighbourhood. "Many of us woke up thinking it was an earthquake."

Opposition politicians have called for the minister of energy to step down from his post, but this is unlikely as Chávez recently publicly ratified him "for the next six years".

By Guardin.co.uk