The Guardian: Shell’s Scotford refinery output cut after fire

Wednesday November 21 2007
(Adds details and comment)

(Reuters) – Some operations at Royal Dutch Shell’s huge Scotford refining complex near Edmonton, Alberta, resumed on Tuesday, a day after a fire damaged its oil sands upgrader, the company said.

Shell’s 98,000 barrel per day refinery and its 155,000 bpd upgrader ran at reduced rates while its chemical plant was operating normally, company spokesman Randy Provencal said. Construction of an expansion to the upgrader was also continuing.

On Monday, a fire ignited after a release of light hydrocarbons and deadly hydrogen sulfide gas at the upgrader, which converts tar-like bitumen from Shell’s northern Alberta oil sands mining operations into refinery-ready light crude. There were no injuries.

Provencal said the upgrader’s two residue hydroconversion units had been shut down after the fire.

“Those are our two biggest units,” he said. “When those two are offline there is a significant reduction in production.”

He said an atmospheric vacuum unit was still producing some synthetic crude but no volume figures were available.

The outage contributed to a sharp rally in oil prices on Tuesday. U.S. crude jumped $3.39 for a record close of $98.03.

The Scotford refinery, North America’s newest, produces gasoline, jet fuel, diesel, propane and butane. The upgrader supplies its oil.

Provencal said the refinery could be supplied with synthetic crude from other sources, but the company wouldn’t take that step until it has investigated the damage.

He declined to specify how much crude was being processed at the refinery.

Shell was selling synthetic crude and fuels from its storage tanks and had not declared a force majeure, which would exempt it from filling supply contracts due to the unexpected shutdown, an executive said.

“We’re working off inventory at the moment, and obviously we’ve started our assessment today and that’s to determine what repairs we need and how long the upgrader might be affected,” vice-president Jan Rowley said.

She also said the Muskeg River mining operations in northern Alberta that supply the upgrader continue following the outage blaze. The company filled storage tanks at the mine and upgrader sites with the unprocessed extra-heavy crude.

“We’ll do that until we can’t do that, or until the upgrader’s back up. We’ll know more in the next day or two,” Rowley said.

Shell owns 60 percent of the upgrader and mine. Its partners are Marathon Oil Corp and Chevron Corp , which own 20 percent each. Shell is the sole owner of the refinery.

(Reporting by Scott Haggett, Jeffrey Jones and Scott Anderson; Editing by Christian Wiessner)

http://www.guardian.co.uk/feedarticle?id=7092459

This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.