By BEN LEFEBVRE and ALISON
The biggest oil refinery in the US is largely out of service
after fires over the last two weeks damaged equipment at the
Motiva Enterprises plant in Port Arthur, Texas.
The fires are the latest in a series of mechanical failures
at the refinery, which doubled in size last
year after a $10 billion expansion paid for by the two
companies that own Motiva, Royal Dutch Shell and Saudi
The 600,000-bpd plant has turned into an economic
headache that analysts have said is costing the companies
hundreds of millions of dollars in repairs and lost fuel
After the fires, Motiva had to take offline its 325,000 bpd
crude-distillation unit, the first step in
fuel production, and various other units, according to
Genscape, an energy information service that uses flyovers and
infrared sensors to detect activity at refineries. Motiva
declined to comment on mechanical problems.
Accidents started occurring almost immediately after the May
2012 opening ceremony in Port Arthur, where the chief
executives of Shell and Saudi Aramco turned a ceremonial
pipeline spigot. A week later, an accidental chemical release
corroded the expanded refinery's new crude-distillation unit, forcing it to
suspend operations for the next six months, the company said at
In December, the same unit was shut down again for several
weeks after a small fire broke out and leaks were found,
according to regulatory filings and information provided by the
company at the time. Another leak forced the company to repair
key diesel-production equipment in June.
For Shell, the problems at the Port Arthur refinery have created "an economic
disaster," said Oppenheimer & Co. analyst Fadel Gheit.
"This thing started on the wrong foot and it continues to
The refinery's poor performance adds to Shell's series of
setbacks in North America. The Anglo-Dutch oil giant was forced
in the second quarter to write down $2 billion of US shale gas
assets that hadn't been as profitable as the company hoped. In
February, it canceled its plans to drill for oil in the Arctic
this summer after special drilling rigs it planned to use for
the project were damaged.
Shell spokeswoman Destin Singleton said Motiva continued to
invest in the refinery but declined to comment on the specifics
of mechanical problems there. The company declined to say how
much gas, diesel and jet fuel the refinery is producing.
For Saudi Aramco, the expansion was meant as a way to help
Saudi Arabia increase its exports to the US. But the refinery
has imported only 1% more crude from that country over the last
12 months, or an average total of 200,000 bpd, according to an
analysis of data from the US Energy Information Administration.
Saudi Aramco didn't respond to requests for comment.
Although the refinery accounts for more than 3% of total US
refining capacity, according to EIA
figures, its extensive operational problems during the past 16
months have limited its impact on fuel markets, said
Morningstar analyst Allen Good.
Wholesale gasoline prices in the US Gulf Coast market have
risen 1% since the latest fire at the Port Arthur refinery, to $2.96/gal, according
to Platts, an energy-price information service.
Dow Jones Newswires