Tag Archives: Refinery

TransCanada ‘West-East’ Oil Pipeline Moves Forward

TransCanada Corp. has moved a major step forward on its plan to ship Western Canadian crude to the country’s eastern refineries and export facilities, so far facing few of the political hurdles that have dogged other pipeline projects aimed at moving crude out of Alberta.

The Calgary-based pipeline giant said Tuesday that it has launched a formal process to acquire shipping commitments from energy companies for the Energy East Pipeline, which could reach New Brunswick’s Irving Oil Ltd. refinery and port of Saint John.

TransCanada said it is confident in gaining such support, and will then file for regulatory review with the goal to begin shipments by late 2017.

“We’re committed,” said Jeff Matthews, Irving Oil’s director of business development. The proposed pipeline “increases our ability to compete in a tough industry by allowing our refinery access to a crude supply region in Western Canada that has not been accessible in the past,” he said.

The west-to-east project – unveiled just a year ago – is gaining considerable momentum at a time when other pipeline projects such as TransCanada’s Keystone XL and Enbridge Inc.’s Northern Gateway face uncertainty amid political friction and environmental concerns.

Energy East is expected to largely handle light oil, along with some heavy crude from the oil sands. As a result, projects such as the Keystone XL and Northern Gateway pipelines will still be needed to bring Alberta’s vast oil sands reserves to market.

The proposed Energy East Pipeline would carry as much as 850,000 barrels a day of western crude to eastern markets, with an option of either stopping in Quebec or extending it to Saint John. At its maximum, it would be 4,400 kilometres long, including the conversion of TransCanada’s underutilized natural gas line to a point near the Ontario-Quebec border, and new construction from there to Saint John.

The Saint John facility is Canada’s largest and most complex refinery. Mr. Matthews said oil producers are also interested in accessing Irving’s Canaport marine terminal for export.

With support from a wide range of politicians, Energy East now faces the acid test of commercial viability as producers weigh competing projects and the appeal of various markets.

While Alberta producers have been keen to reach the huge refining hub on the U.S. Gulf Coast, or access fast-growing markets through Asia, the Eastern Canadian market appears to be their most problem-free alternative, at least in the short term. But there is limited capacity to process oil sands bitumen at refineries in Ontario, Quebec and Atlantic Canada.

Keystone XL, which would carry bitumen to the Texas Gulf Coast, has encountered lengthy delays from the Obama administration in the face of fierce criticism from environmentalists. The company says it remains confident of eventual approval, but the political risk remains high.

At the same time, Northern Gateway – which aims to transport oil sands crude to Kitimat, B.C., for export to Asia – has run into a wall of opposition from First Nations, the environmental community and the B.C. New Democrats, who may well win government in the upcoming provincial election.

The eastern pipeline proposal has won broad endorsement from the federal government, the New Democratic Party opposition, and New Brunswick Premier David Alward. Quebec Premier Pauline Marois has been consulted on the project and has given support in principle.

IHS Inc. analyst Jackie Forrest said the industry would face 1-million barrels per day of pipeline over-capacity if all the proposed projects were completed on schedule in the 2015 to 2018 time period.

“However, producers are looking for market options – so it is possible we would see a future scenario with excess pipeline capacity,” Ms. Forrest said. “And since we expect oil sands to grow beyond 2020, this extra capacity would be needed in the early part of the next decade.”

SOURCE: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/transcanada-moves-ahead-on-ambitious-plan-to-pipe-oil-to-quebec-nb/article10663042/

Extensive Corrosion Found – Port Arthur Refinery

Extensive corrosion, that may require up to five months to repair, has been found inside a new 325,000 barrel per day (bpd) crude distillation unit at a 600,000 bpd Port Arthur, Texas, refinery, according to sources familiar with refinery operations.

The root cause of the corrosion, found in vessels and piping on the crude distillation unit (CDU), has not been determined, the sources said.

Damage from a fire on the CDU during an attempted June 9 restart was seen as negligible, the sources said.

The refinery owner won’t know the full scale of repair work needed until it determines the cause of the corrosion, the sources said.

A representative was not immediately available to discuss refinery operations. On Friday, the owner said there was no timeline for bringing the crude unit back into production.

The unit began refining crude oil in April and was officially commissioned at a May 31 ceremony

This particular refinery’s Port Arthur CDU was built to run heavy, sour crude oil grades that have a high risk of corroding refinery units due to high sulfur content.

“There’s extensive corrosion in the crude unit itself,” one of the sources said. “All of it. Piping, vessels, all of it. It could take up to five months to fix. It will be several months.”

The CDU, which does the initial refining of crude oil coming into the refinery and provides the feedstock for all other refining units, is the centerpiece of a $10-billion, 5-year project to expand the refinery to be the nation’s largest.

At the time, the CDU was shut down it was three weeks away from reaching full production, a refinery owner executive had said.

Pittsburgh-area site is chosen for major refinery

Shell Oil Co. has chosen a site near Pittsburgh for a major, multi-billion-dollar petrochemical refinery that could create thousands of construction jobs and provide a huge economic boost to the region.

Dan Carlson, Shell’s General Manager of New Business Development, said Thursday that the company signed a land option agreement with Horsehead Corp. to evaluate a site near Monaca, about 35 miles northwest of Pittsburgh.

The so-called ethane cracking, or cracker, plant would convert ethane from bountiful Marcellus Shale natural gas liquids into more profitable chemicals such as ethylene, which are then used to produce everything from plastics to tires to antifreeze.

The plants are called crackers because they use heat and other processes to break the ethane molecules into smaller chemical components. A cracker plant looks very similar to a gasoline refinery, with miles of pipes and large storage tanks. The final complex could cover several hundred acres.

Ohio, West Virginia and Pennsylvania had all sought the plant and offered Shell major tax incentives. Monaca is about 15 miles from both the Ohio and West Virginia borders, so workers in all three states are likely to benefit.

Shell has said that it could spend several billion dollars to build the plant, and that the complex would attract a wide range of industry and suppliers to nearby locations. But actual construction is still years away. The company said the next steps are environmental and design studies and further economic analysis, then permits.

One lifelong resident of the Pennsylvania township almost broke down on hearing the news.

“Oh my God. It makes me want to cry. That’s just the best news,” said Christie Floyd-Gabel, Potter Township’s secretary.

It’s also an unexpected turn for Horsehead’s zinc factory on the banks of the Ohio River, which is currently operating. In September the company announced plans to shut the factory by 2013 and relocate to North Carolina, along with most of its 600 workers.

“That was a major loss,” Floyd-Gabel said of Horsehead’s plans to depart, adding that’s it’s amazing that another major corporation may come in to replace Horsehead.

Ali Alavi, a Horsehead spokesman, said the company would have to vacate the over 300-acre site by April 30, 2014, under the terms of the option agreement with Shell.

Shell said the Horsehead site had the mix of resource and transportation attributes “to accommodate facilities for a world scale petrochemical complex and potential future expansions.”

The American Chemistry Council, in a report last year, estimated the new petrochemical complex could attract up to $16 billion in private investment. Shell estimated the core plant could employ several hundred people and create up to 10,000 construction jobs.

Gov. Tom Corbett said at a press conference that the plant could lead to the “renewal of a significant manufacturing base in southwestern Pennsylvania,” but cautioned that the announcement is “the first pitch in a nine-inning game.”

If the plant is built, Shell would be able to supply it partly with gas from its own wells, giving it more control over supply and costs. The company paid $4.7 billion in 2010 for drilling rights to about 650,000 acres in the region.

That also means that Shell could benefit even from the low wholesale prices that have worried some gas drillers, since a cracker plant’s raw material costs would be lower.

Labor leaders welcomed the announcement.

Frank Snyder, secretary-treasurer for the Pennsylvania AFL/CIO, said it represented “some of the most positive economic news for the working families of western Pennsylvania in over a generation.”

“Indeed, all of Pennsylvania can have hope this spring in the anticipated partnership between a world class workforce and a world class business,” said Snyder.

Shell’s choice may also represent an indication of just how strongly the industry feels about the vast gas reserves in nearby underground shale rock formations, given the multi-billion dollar commitments it has made. Carlson told The Associated Press that any plant must be economically competitive with existing cracker plants in Louisiana and Texas, and even with international plants.

The Marcellus Shale, which lies thousands of feet underground, has attracted a rush of major oil companies, who have drilled almost 5,000 new wells in the last five years. The Marcellus covers large parts of Pennsylvania, New York, Ohio and West Virginia, and drillers have also started to tap the adjacent, deeper Utica Shale formation.

Ohio and West Virginia officials had made all-out efforts to attract the plant. Last year West Virginia Commerce Secretary Keith Burdette said, “We intend to compete with the last breath in our body to attract one or more crackers,” and both West Virginia’s and Ohio’s governor flew to Houston to meet with Shell officials.

West Virginia offered to slash property tax rates for 25 years in exchange for at least $2 billion worth of investment. Pennsylvania offered 15 years of tax breaks and Ohio also reportedly courted Shell with major incentives.

Corbett said he can’t disclose the full details of the tax breaks Shell has been offered because of a confidentiality agreement, and because negotiations are continuing.

George Jugovic, president of the environmental group PennFuture, said it’s still researching the possible impacts of a cracker plant.

Several other companies are also reportedly considering building similar petrochemical plants in the region.

SOURCE: http://www.philly.com/philly/business/20120315_ap_pittsburghareasiteischosenformajorrefinery.html