Refinery production cut due to crude supply

HOUSTON (Reuters) - Royal Dutch Shell Plc cut back production at its joint-venture 275,000 barrel-per-day (bpd) Deer Park, Texas, refinery due to a shortage of crude supply because of the closure of the upper Houston Ship Channel, sources said.

Shell spokesman Ray Fisher said operations were stable at the Deer Park refinery, which is next to the site of a fire at Intercontinental Terminals Co (ITC), a unit of Mitsui & Co Inc, last week.

The sources did not know how much production was cut back, but added that some units are on circulation, which takes them out of production but keeps them at operating temperatures for a quick return to production.

Shell shut a 35,000-bpd vacuum distillation unit (VDU) on Friday night, according to energy industry intelligence service Genscape. VDUs refine residual crude from atmospheric distillation units, which do the initial refining of crude oil at a refinery.

A dam at the ITC petrochemical tank farm, where 11 80,000-barrel storage tanks burned last week, failed on Friday, allowing chemicals released from the burned tanks to spill into the ship channel.

The U.S. Coast Guard shut the channel to contain and clean up the spill.

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