(Updates with information from sources, background, details)
By Erwin Seba
PORT ARTHUR, Texas, Aug 19 (Reuters) - A fire at the largest
oil refinery in the United States has knocked out more than half
of its output for at least two weeks, the latest in a string of
mishaps following a $10-billion expansion at the Motiva plant in
Port Arthur, Texas.
Royal Dutch Shell Plc - which owns the refinery
with Saudi Aramco - said production was crimped after
the fire on Saturday, the second in a week, caused reductions
and shutdowns at the 600,000 barrel-per-day (bpd) plant.
Despite the outage, the U.S. Gulf Coast refined oil markets
had a muted reaction. U.S. Gulf Coast gasoline and ultra-low
sulfur diesel prices relative to the New York Mercantile
Exchange barely rose on Monday because the region is well
Sources familiar with work at the plant said on Monday the
fire broke out in a hydrocracker unit next to the largest of the
refinery's three crude distillation units, known as VPS-5.
The 325,000 bpd VPS-5 unit will be out of production for at
least two weeks. It was placed on warm circulation on Sunday
because of the hydrocracker shutdown. The VPS-5's vacuum section
produces a large volume of vacuum gasoil, which the neighboring
hydrocracker refines into motor fuel.
A refining unit on warm circulation is kept at high
operating temperatures continues to have oil circulating through
it, but does not produce.
The 110,000 bpd naphtha hydrotreater was also shut briefly
but was restarted Sunday night, said energy industry
intelligence service Genscape.
The sources said the 75,000 bpd hydrocracker, which boosts
output of motor fuel by refining feedstocks under high pressure
with hydrogen, was shut by fire which damaged communication
lines and instrumentation needed to run the unit.
The hydrocracker's production sections were not damaged by
"Several units that are integrated to this will run
at reduced rates and others are being shut down," while repairs
are underway, Shell spokeswoman Kimberly Windon said.
Windon added there were no related injuries at the plant,
which has about 3.4 percent of U.S. refining capacity.
The sources said refinery managers spoke of their
frustration on Monday with the problems that have plagued the
expanded refinery since it began operating in late April 2012.
"It was a bad weekend for us," said one source. "We're all
feeling snake-bit. It just seems like we get up and going and
then something else goes wrong."
SERIES OF SETBACKS
The weekend fire was the latest in a series of setbacks at
the refinery, where the VPS-5 crude distillation unit (CDU) is
expected to run up to 75,000 bpd below capacity for more than a
year due to a piping issue.
The CDU has been beset by vibration problems when Motiva
attempted to run it at or near its full capacity, Reuters
exclusively reported on Friday.
The company may shut the crude unit in fall 2014 to fix the
persistant vibration problems, sources told Reuters on Friday.
The unit has been running at reduced rates ranging between
250,000 bpd and 285,000 bpd since it restarted production early
The CDU was damaged about a month after initial start-up
following five years of construction by a chemical leak in June
2012 that caused seven and a half months of work and delays.
A week ago, a blaze shut the sulfur recovery unit and led to
a reduction in refinery production at the plant. The sulfur unit
is slated to be down for two to three weeks.
In that incident, a hole 5-feet long (1.5 meters) and 1-foot
wide (30.5 centimeters) was melted in the side of the unit that
removes sulfur from hydrogen sulfide gas produced in the
refining of crude oil into motor fuels.
"It is not unusual for a sulfur unit to have problems,
especially at the biggest refinery in the United States. It is a
bad place to have an issue because once it's shut down you'll
have to shut other units like hydrotreaters that feed into it,"
said John Auers, refinery specialist with Turner, Mason &
Company in Dallas.
(Additional reporting by Selam Gebrekidan in new York and
Kristen Hays in Houston; Editing by Terry Wade and Andrew Hay)
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