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Refinery upkeep costs poised to rise, says Tyco

05.21.2012  |  HP News Services

Refinery maintenance will likely become more expensive in the next few years as operators have to make costly changes to comply with new environmental regulations.



BARCELONA -- Maintaining refineries across the globe will become more expensive in the next few years as refineries have to make costly changes to comply with new environmental regulations, the global market manager for oil and gas refining of Tyco Flow Control, a segment of Tyco International, said Monday.

Higher oil prices in recent months have strained profits in the refining industry, particularly in Europe.

Increasingly costly maintenance periods for refineries could further hurt profits in the industry, which has seen seven refinery shutdowns since 2008.

From 2000 to 2008, the cost of refinery turnarounds has increased by 15%, Tito Sequeira said, citing industry data and anecdotal experience with customers.

"We don't see anything stopping this trend," he said on the sidelines of the Global Refining Summit in Barcelona.

He said with the decline in the number of engineering graduates, it is increasingly difficult to find talent trained in refinery maintenance.

To make matters worse, some refineries are also located in remote places with few technicians qualified there to service refineries, he said.

"Much refinery maintenance is not done properly - something breaks or doesn't work as there's less maintenance talent available," he said.

Torrill Rod, Statoil’s operational engineer at the Mongstad refinery in western Norway, said turnaround costs have increased since she started working at the refinery 17 years ago.

Parts of the refinery, which has capacity of 10 million tpy of crude oil, were built in the 1970s and have needed significant upgrades during the maintenance periods, she said.

In addition to a push by the European Union to reduce carbon emissions by 2013, a move that could make it more expensive for European refineries to operate, refineries are increasingly processing heavier grades of crude oil that require higher temperatures and pressures.

This exerts more pressure on equipment such as valves, and equipment used under these tougher circumstances requires more maintenance, Sequeira said.

Dow Jones Newswires

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