By LYNN DOAN
Royal Dutch Shell, Europe
s biggest oil company,
is considering retiring one of two coking units at its only
refinery in California as the company seeks to run lighter
crude at the plant.
The company has applied to county regulators for a permit to
shut the flexicoker at the 156,400-bpd Martinez refinery
northeast of San Francisco, a move that would shrink the
plants reliance on heavy oils and cut its
by 15%, said Destin
Singleton, a Shell spokeswoman. The unit helps convert the
denser crude into more valuable products such as diesel and
Shell is considering the shutdown as hydraulic fracturing and
horizontal drilling unleash record volumes of light oil from
shale formations across the middle of the US.
Californias refiners, lacking pipeline access to the
growing crude supplies, are bringing in the most ever by rail
as they work to counter shrinking production within the state
and from Alaska.
The reality is that we are looking at each individual
and making economic
decisions as to what is the most optimal feedstock
, John Abbott,
downstream director for Shell, said in an interview at
s headquarters in New York.
This is one of the most competitive assets on the West
Coast of the US and in California.
margins on the US West
Coast, a rough indicator of profitability, averaged $7.62/bbl
in the first quarter, almost twice the $4.07/bbl coking
margin on the Gulf Coast, Shell said.
While the Martinez refinery doesnt have the equipment
to unload oil from rail cars, it receives crude by pipeline
from a complex in Bakersfield, California, that takes train
deliveries. The refinery
would continue to receive
oil by pipeline and vessel using existing infrastructure once
the coker is shut, she said.
Overall, heavy crudes are a big part of our current
mix, Singleton said. Well be processing the
same crudes we refine today, but the mix will be lighter
meaning significant reductions in greenhouse gas emissions
, less electricity use,
and more efficient operations.
A delayed coker, which was installed at the refinery in the
1990s, based on air regulatory filings, will remain in
service, she said.
Refiners from Tesoro to Valero are working to bring more
shale oil to their plants on the US West Coast by rail.
Trains delivered 395,053 bbl of oil to California in March, a
record volume for that month, the most recent data available
from the state Energy Commission show.
Shell is seeking permits to build a rail complex at its
Anacortes refinery in Washington state that would allow the
plant to unload oil from as many as six trains a week,
regulatory filings show. The company has also said that
its carrying upgraded crude to the West Coast from its
Scotford oil-sands upgrader in Canada.
Martinez imported 903,000 bbl of medium-to-heavy crude in
February from Canada, the most recent data available from the
Energy Information Administration show. The complex already
processes some lighter crudes, like oil from North
Dakotas Bakken formation, along with heavier feedstock
Central Valley, Singleton said.
Contra Costa County regulators are expected to prepare a
report on the environment
al impacts of the coker
retirement, and the public will have a chance to comment on
the plan during that process, she said.
Chevron's Richmond refinery
, west of Martinez, is
also applying to local regulators for a project
that would change its
crude slate. The plan would replace a hydrogen plant and
increase capacity at the fluid catalytic crackers
hydrotreater and sulfur-recovery system to run higher-sulfur