August 18, 2012:

Gulf Coast gasoline and diesel rose after refineries reported maintenance and an electrical interruption, raising speculation that production may be slowed. Petroleo Brasileiro SA’s (PBR) Pasadena refinery in Texas shut a crude unit for “corrective” maintenance through Aug. 19, Sophie Gates, a company spokeswoman in Houston, said in an e- mail yesterday. Exxon Mobil Corp. expects production at its Beaumont, Texas, refinery to be affected after a power failure caused multiple unit upsets, Kathleen Jackson, a Beaumont-based spokeswoman for Exxon, said in an e-mail yesterday. The discount for conventional, 87-octane gasoline in the Gulf Coast narrowed 2.25 cents to 13 cents a gallon versus futures traded on the New York Mercantile Exchange at 1:57 p.m., according to data compiled by Bloomberg. Prompt delivery fell 2.11 cents to $2.9096 a gallon.

The premium for ultra-low-sulfur diesel at the hub rose 0.32 cent to 8.25 a gallon versus Nymex heating oil futures. Power has been restored and the 345,000-barrel-per-day Beaumont plant is resuming normal operations, Jackson said. She didn’t immediately respond to questions in an e-mail today about whether operations were fully restored at the plant. The discount for conventional gasoline to be blended with ethanol, or CBOB, in New York Harbor, narrowed 1 cent to 1.13 cents a gallon.

Hess Corp. reported an emissions violation at its Port Reading refinery in New Jersey, according to a filing with state regulators. The violation was because of a “non-operational” malfunction, the filing yesterday showed. The 70,000-barrel-a-day plant is conducting minor maintenance that has no impact on operations, the company said in an e-mailed statement.

By Bloomberg

August 18, 2012:

A power outage shut down the Sinclair Oil refinery near Rawlins on Thursday. The 4:30 p.m. outage forced the company to engage emergency shutdown procedures, which included sounding an emergency whistle and heavily burning gas through the refinery’s flare stack, according to Sinclair Police Chief Jeff Sanders. Power has since been restored to the plant, according to a company statement released Friday. No workers were injured in the outage, which forced the company to idle the refinery overnight. The police department closed roads surrounding the refinery for about an hour as the flares burned. Sanders said the closure was precautionary because of wind direction. “It’s the normal procedure in the event of a power outage,” he said. The company is evaluating equipment in the wake of the outage. At least one sulfur processing unit was damaged. Sinclair said in its statement that “inconsistent power” is a concern. Area refinery officials broached the power outage topic at a recent safety meeting convened by Sinclair.

The Sinclair refinery is powered by the Jim Bridger and Dave Johnson public power plants, both owned by Rocky Mountain Power. Rocky Mountain power has worked closely with Sinclair to increase reliability in the.  Rawlins area, according to Dave Eskelsen, a spokesman for the company. “We strive to provide highly reliable electric service, but can’t and do not guarantee uninterrupted service,” he said. Rocky Mountain Power is investigating the outage.

By trib.com

August 18, 2012:

Political, business and union leaders reacted with caution and in some cases deep skepticism Friday to a B.C. community newspaper publisher's bold proposal to build a $13-billion refinery near Kitimat on the West Coast. David Black floated the idea of building the refinery to reframe discussion on Enbridge Inc.'s controversial Northern Gateway oil pipeline by promising 10 times as many jobs and eliminating the shipment of oil off the B.C. coast. The idea is to process all of the 550,00 barrels a day of crude oil from the proposed Northern Gateway pipeline in the refinery, and then ship refined oil products such as gasoline, diesel and kerosene. Black argues if there was a tanker spill, the refined products would cause less damage because they float and evaporate. Black, who acknowledges he has no support from oil producers, hopes his proposal will temper opposition from British Columbians and first nations, many of which have rejected the $6-billion project because they say the economic rewards for B.C. are not great enough to offset the risk and consequence of an oil spill on the pipeline or off the northwest coast of British Columbia.

He said he does have support for the concept from Enbridge CEO Pat Daniel, although the Calgary-based company declined to comment Friday. Black also said he has no financial backers, no partners and has not discussed the idea with potential Asian customers. He has had only brief discussion with a pair of first nations in the Kitimat area. Still, Black, who owns more than 150 community newspapers in B.C. and the United States, said he believes support and financial backing can be found for the refinery and that people will listen to him. "I'm hoping this will jump start a change in the debate," Black told reporters at a Vancouver news conference. "In other words instead of just saying 'no,' let's say how can we work with this to our advantage - get a lot out of it and solve potential problems at the same time. Peter Boag, president of the Canadian Petroleum Products Institute, called the proposal "interesting" but speculated the $13 billion price tag could be low. "Clearly there are some significant economic and regulatory hurdles that would have to be overcome before we would see that proposal come to fruition." Michael Dunn, oil and gas analyst with FirstEnergy Capital Corp. in Calgary, also expressed skepticism.

"If they don't want a pipeline to Kitimat I'd be surprised if they'd want a refinery," he said. "Assuming a pipeline doesn't spill, it would make for a cleaner harbour at Kitimat than a refinery on the water there."He added there is excess coking capacity in upgraders on the U.S. Gulf Coast, so it makes far more economic sense to send heavy crudes there for upgrading than to build new plants elsewhere. There's lso excess capacity in refineries on the east coast of Canada and the United States. "I suspect the economics are not too enticing. Kitimat is reasonably remote and it would not be the cheapest place in the world to build a refinery," said Dunn. The proposed refinery site is 3,000 hectares of industrialzoned land 25 kilometres north of Kitimat known as Dubose, which Black has not purchased. He has reserved a name for a company, Kitimat Clean Ltd., but has not incorporated the company.

Black said he plans to submit an environmental assessment to B.C. regulators next month, using his own money, which he estimates will cost a few million dollars. He made it clear he would not be investing in the refinery himself, noting even a one per cent stake would cost $130 million. Natural Resources Minister Joe Oliver said the federal government welcomes any project that boosts Canadian exports and jobs, but said he wouldn't pass judgment on the idea. "The reason refineries haven't been built in Canada since the 1980s is because there hasn't been an economic case for them, and the private sector just hasn't seen the advantage," he said.

"If he's serious it's presumably because he's pushed the numbers and come to a case. But I'm not in a position to know whether this is likely or not," said Oliver. University of Calgary professor Michal Moore said it was "naive" to think a refinery would be built near Kitimat. The Asian market is not looking for refined products, but oil, he said. It would also be virtually impossible to mobilize the labour force and infrastructure in a "tiny place" such as Kitimat to support a refinery, said Moore, an expert in energy markets with the school of public policy. Black acknowledged his refinery proposal did not address concerns about the pipeline's safety, adding Northern Gateway should not proceed unless there is confidence that any pipeline leakage will be immaterial.

Josh Paterson, staff lawyer at West Coast Environmental Law said Black's announcement caught the environmental movement off guard. "I don't see this going anywhere. There are no backers, no support no financing in place," he said. Jennifer Grant, oilsands director for the environmental research group Pembina Institute, said she was skeptical a new refinery would substantially reduce the environmental risks of the pipeline project. "Suggesting a major gasoline or diesel spill would just evaporate and not require remediation seems a bit of an oversimplification of a potentially much larger incident," she said. The associations representing Canadian oil producers and refiners offered modest support. Greg Stringham, vice-president with the Canadian Association of Petroleum Producers, said the West Coast is an important export point for Alberta crude, so any projects that could lead to increased access should be carefully considered.

However, he added the refining market in North America is currently very competitive, so it's uncertain how another plant might fit in. "The margins have been relatively tight and that's what people are looking at in evaluating this. So there are pros and cons we'll have to look at it very carefully," he said. "At the end of the day, it's going to have to be the commercial interest that will evaluate and decide on it." Alberta Federation of Labour President Gil McGowan said while his organization has always favoured keeping refining jobs in Canada, "we are not convinced this is a credible proposal." "Is this a real proposal or is it simply a ruse to help get the pipeline built?" he said. Black said Daniel, the Enbridge CEO, has given him support. "Pat Daniel told me personally he is OK with a refinery; that would be fine. But he's got a lot of partners there. Most of the people in that partnership are not Enbridge. They are oil producers and some of them have been very clear to me: they would much rather put it in tankers - heavy oil in tankers - than sell it to a refinery."

The refinery is estimated to create 3,000 jobs, half of those directly in the refinery and the other half in contract jobs. Another 6,000 workers would be hired during the fiveyear construction period. Black is proposing to reduce capital costs from Canada's high labour rates by building refinery modules offshore to be shipped to Kitimat.  The Northern Gateway pipeline is estimated to create about 350 permanent and contract jobs in B.C., onetenth of the permanent jobs a refinery would create. A pipeline would also create thousands of jobs during its three-year construction phase. With files from Dan Healing, Calgary Herald, and Postmedia News Services.

By CalgaryHerald

August 17, 2012:

Scott Banda, CEO of Federated Co-operatives Limited, told reporters on August 16 that his company accepted the results of the investigation into the explosion at the Co-op Refinery Complex in Regina, Sakatchewan, last October, which injured 52 people and caused $100 million in property damage and production loss.  One pipe ruptured in an overhead pipe rack in a diesel processing area called the Middle Distillate Unifier (MDU). The failure resulted in a 7.5 inch long rupture in the six-inch diameter reactor effluent line, triggering an explosion, fire and subsequent explosions. The fire-damaged area was 90 feet by 130 feet or less than half an acre within a complex covering almost 640 acres. Banda said the company regretted the incident and apologised to the citizens of Regina. With respect to the corroded pipe, he said thinning of the wall was detected when the 20-foot pipe was inspected in 2010.

"Corrective actions were taken in terms of replacing some pipe, decisions were made and the protocols were followed as to how far those went. In short, something was missed," he said. Since the fire and explosion, Banda noted the company's "outstanding safety record," but added that "clearly we can do better." Since the incident, he said the company has improved its inspection procedures because "this is not something we ever want to have happen again." The explosion happened in the  early afternoon with about 400 refinery employees and 1,000 contractors working in the area. The contractors were working on a $1.9-billion renovation and expansion of the refinery, located in north Regina. Injuries included burns, smoke inhalation, minor bruises, sprains and abrasions.

Gerard Kay, deputy fire chief for the City of Regina, explained that a six-inch-diameter reactor effluent line carrying hydrogen gas, hydrogen sulphide and diesel fuel suffered a "catastrophic failure" when a 7.5-inch breach occurred due to wall thinning from internal corrosion. The leaked contents caused the explosion when encountered with multiple ignition sources and "hyper static electricity," said Kay. The fire caused four other hydrogen lines to breach, resulting in more explosions. Besides the effect of chemicals passing through the pipe, corrosion was enhanced when a heat exchanger was cleaned in 2008, which caused the temperature of the substance to increase by about 10 C. Normally, the substance is about 177 C, said Mark Simpson, superintendent of equipment integrity and engineering for the refinery. He estimated the pipe was installed in 1961.

The fire damaged an 11,700-square-foot area of the refinery, including the compressor building and the processing area where the explosion occurred. Piping has been replaced in the area or deemed to be in good condition. Prior to the explosion, 42,000 litres of diesel was being produced a day. As a result of the incident, the company lost 20% of its diesel production. Banda said he doesn't expect the two processing units that were affected by the explosion to be operational until November. On May 15, another fire broke out at the refinery when an oil pump overheated and ignited crude oil, setting a building on fire. The incident caused $5 million in damage.

By HazardEx

August 17, 2012:

TOKYO - Japan's top oil refiner, JX Nippon Oil & Energy, said on Friday it has halted operations at a 136,000 barrels per day (bpd) crude distillation unit (CDU) at the Oita refinery in southwestern Japan on Thursday after a leak of liquefied petroleum gas (LPG) from the unit. The incident did not cause fire or injuries, a company spokeswoman said. The LPG leak was detected from a part of the CDU that separates naphtha and LPG a r ound 1:45 p.m. (0445 GMT) on Thursday, with the CDU halted immediately after that, another company official said. The leak was stopped on Thursday. It remains unclear when the CDU could resume operations pending its own investigation, company officials said. But the shutdown will not be long, one of them added.

There will be no major impact to product shipments from the refinery for the foreseeable future as the plant has sufficient product stockpiles, officials said. The local authorities issued a suspension order on the CDU, and some related secondary units have been also halted for precaution, including a 66,000 bpd vacuum distillation unit, one of the company officials said.

By Reuters