Refinery Updates
July 2004
Table of Contents
1. AMERICAS
Refinery Releases Carbon Monoxide
A boiler failure at an oil refinery that allowed carbon monoxide to vent for nearly three days was the third incident at the plant this year.
Tesoro Petroleum Corp.'s Golden Eagle Refinery has had more incidents than any Bay Area facility in the last two years, according to Bay Area Air Quality Management District records.
But the company and government regulators say none of the incidents threatened public health, and are not an indication that the refinery is experiencing safety or reliability problems.
The refinery, parts of which were built in the 1930s and 1940s, had a troubled safety record before Tesoro purchased it two years ago.
When it was owned by Tosco Corp., the facility was known as the Avon Refinery. A 1997 explosion at the refinery killed one worker and injured 25. A 1999 fire killed four workers, and Tosco paid millions to settle lawsuits and findings of safety violations.
In 2000, Tosco sold the refinery, which can process 168,000 barrels of oil a day, to Ultramar Diamond Shamrock for $800 million.
When Tesoro purchased the plant and 70 gas stations for $1 billion, it made more than $500 million in improvements, company spokesman Jon Ballesteros said.
"It's safe to say there's been a change in culture here," Ballesteros said. "Everybody focuses on safety, environmental compliance and reliability."
The latest incident at the Martinez refinery took place on the Fourth of July, and involved the processing of gases from a fluid "coker" unit.
The gases, including carbon monoxide, are usually processed in a boiler into a more benign gas -- carbon dioxide -- said Paul Andrews, a hazardous materials specialist for Contra Costa County.
Air district officials said that a mechanical failure in a boiler sent a plume of carbon monoxide, carbon particles and steam wafting from the boiler's smokestack.
Instead of shutting the refinery down, workers tried to route gases from the coker unit to another boiler. But according to air quality regulators, the fix wasn't completed until nearly 64 hours later.
In the meantime, the air district confirmed 12 complaints of smoke, fall-out and odor from the incident.
Andrews said the emissions might have been a concern for people with respiratory problems, but that the release didn't warrant issuing a "shelter in place" warning to residents of nearby homes to remain indoors.
Ballesteros said working around the problem, rather than shutting the refinery down, was "the safest way to deal with this situation. ... shutdown and startup are the most dangerous situations for this unit."
The incident was the third this year at the Golden Eagle Refinery.
On Feb. 20, a power outage tripped circuit breakers and several processing units were depressurized. Gases from the processing units were burned off by five flares, producing black smoke visible throughout the area. The refinery's emergency flare burned for 85 minutes.
On the first two days of March, the air district and Costra County health officials received more than 50 complaints of sulfur odors for the refinery.
All three incidents are under investigation by the Bay Area Air Quality Management District, which has issued formal notices that it intends to find that the refinery violated its air quality permit.
Ballesteros said the Feb. 20 power failure was an event beyond Tesoro's control. Although the company was unable to find any mechanical causes for the odor complaints in March, he said adjustments were made to the plant's steam flares and the problem hasn't occurred again.
Ralph Borrmann, a spokesman for the air district, said the recent problems at the refinery are "not of the seriousness of things that happened in the past. Things have changed in that facility since they had that explosion several years ago."
Plants to have New Guidelines
Following an investigation into a fire at Huntsman Petrochemicals on Jan. 13, the U.S. Chemical Safety and Hazard Investigation Board voted to establish new guidelines for non-routine maintenance.
Clark Colvin, manager of community relations at Huntsman, said the company is making plans to ensure the prevention of another accident like the one in January.
"We are certainly sorry that it happened. We are making certain that we prevent anything else like that. Our company policy will reflect the board's recommendations," Colvin said.
The accident, which seriously injured two workers, involved an explosion and fire when workers attempted to purge a 1,000-foot-long chemical process pipe in preparation for a cutting and welding operation, according to a release from the board.
Carolyn W. Merritt, chairman and CEO of the board, said the accident happened when employees failed to realize a 300-foot section of the pipe had a lower section where 400 gallons of peroxide and ammonia, a combustible combination when heated, were trapped. After workers used a nitrogen push to expel any remaining chemicals, the trapped chemicals caused an explosion and fire.
"Using a nitrogen push is a very good procedure, but we want plants and refineries to realize they need to walk these lines before any maintenance they do," she said.
Merritt said the main point the board would like to communicate is that all plants and refineries should never consider the opening of chemical process pipes as routine maintenance.
According to the bulletin, recommendations include physically examining all piping and components between isolation devices such as valves and be sure piping drawings are current; use the drawings to identify key components, such as low-point drains that can be used to remove dangerous chemicals; and, prepare a specific written procedure for removing hazardous material and consider the consequences of working on piping that is not completely purged.
Merritt said the board appreciates all of the help from Huntsman. "It is certainly not easy for a company to give information about an accident like this," she said.
Arizona Refinery Project Facing Approval Process
The first new U.S. oil refinery in decades could be opened near Yuma in late 2008. That's assuming proponents, who already have invested five years in the project, are able to surmount some pretty formidable obstacles.
The Arizona Clean Fuels Refinery is the only active new refinery project in the United States, despite industry claims that current facilities are now operating at capacity with demand increasing every year.
Proponents of the $2.5 billion project, which has been relocated from Maricopa to Yuma County, hope to receive a draft air-quality permit from the Arizona Department of Environmental Quality in the next month. After that there will be a series of public hearings on the proposed permit and an eventual final decision.
An Environmental Protection Agency permit also is necessary and hinges on the state's approval.
"The approvals are the linchpin to attracting the capital that is needed," said Ian Calkins, a spokesman for the project.
Proponents say they will need about $2.5 billion to construct the refinery on a 1,500-acre site 40 miles east of Yuma. They will need an additional $500 million to $1 billion to build a pipeline to bring in crude oil from Mexico. Calkins said the company is negotiating with Mexican oil producer Pemex for a supply contract.
The refinery would have an output capacity of 150,000 barrels, or 6.3 million gallons of gasoline, more than enough to cover the Valley's average daily supply of 4.6 million gallons.
Air Polluter Fines too Small, Environmental Group Says
Large industries in California that violate air quality regulations are not being punished enough, a Washington-based environmental organization said.
Many oil refineries and power plants often pay $2,000 or less for exceeding pollution standards, according to a report released Thursday by the Environmental Working Group.
After studying enforcement penalties in California, the organization found that half the fines levied against large industries over the last five years were less than the $2,500 maximum that an SUV owner can pay for not meeting state smog standards.
The environmental group said fines increased slightly since it conducted a similar study in 1999, but concluded that fees are too small to force industries to change.
In the last five years, eight major industrial sites were fined more than 50 times. A Shell refinery in Martinez and a Chevron refinery in Richmond were each cited more than 120 times, according to the group's report.
But the group's analysis has been strongly disputed by some regional pollution officials.
Oil refineries have tried reducing their contributions to air pollution and no longer account for a large share of pollutants, said Western States Petroleum Association spokesman Jeff Wilson.
Emissions from heavy industry also have declined, according to the South Coast Air Quality Management District, which is charged with reducing air pollution in Los Angeles, Orange, Riverside and San Bernardino counties.
The agency issued many large fines against repeat offenders in the last five years, including more than $2 million in penalties against a Mobil oil refinery in Torrance. But many of its fines stem from violations of record-keeping rules and other relatively minor pollution standards.
Cars, trucks, airplanes, ships and automobiles are the biggest sources of air pollution in California. But factory smokestacks and other stationary sources remain major contributors to the state's smog and air quality problem.
Mississippi Company Negotiating for Crown Refinery
A Jackson, Mississippi company is in talks to buy Crown Central Petroleum Corp.'s 60,000 barrel per day (bpd) refinery in Tyler, Texas, according to sources familiar with refinery operations.
A spokesman for privately-held Crown, which has been attempting to sell the refinery for three years, declined to answer questions about the sale of the plant, which is owned by subsidiary LaGloria Oil & Gas Co.
Privately-owned Ergon Inc., which operates three refineries, has entered into an exclusive negotiating agreement with Crown for the Tyler refinery, the sources said.
The Paper, Allied-Industrial, Chemical and Energy Workers International Union said on Thursday negotiations for a new contract for 138 workers at the Tyler refinery have broken down over a requirement that would bind any buyer of the refinery to honor the contract.
A Union representative declined to discuss potential buyers of the refinery.
Ergon is a 50-year-old company with operations in petrochemical refining, information technology, oil and gas exploration, and real estate.
Ergon's three refineries are the Lion Oil Co. 64,000 bpd refinery in El Dorado, Arkansas, which produces motor fuels and petrochemicals; a 23,000 bpd plant in Vicksburg, Mississippi, which makes asphalt and specialty oils; and a 19,500 bpd refinery in Newell, West Virginia, which makes oils, waxes, gasoline and diesel.
Crown owns two Texas refineries, both of which are for sale. The Tyler refinery is expected to sell for between $30 million and $50 million.
Newspaper reports have said Ergon's revenues are more than $1 billion annually.
Mandan Refinery will get Scrubber
A scrubber that must be installed by 2006 on the Tesoro Refinery in Mandan, ND should prevent escapes of the black catalyst cloud that fell over the refinery's neighborhood in June.
People living near the refinery reported a cloud that hung for about an hour after a thunderstorm in early June, leaving a black oily residue on cars and houses.
The scrubber requirement is part of the refinery's Title V air-quality permit issued earlier this year by the State Health Department.
Refinery officials said an evening storm caused an electrical shortage and forced an emergency release from its main stack.
The officials told the public the cloud was a sand-like mix of burned carbons, alumina and silica. According to the refinery's material data report, the catalyst also contained a low concentration of heavy toxic metals, one of them classified as a carcinogen.
Refinery environmental manager Ron Day said the release of about 10 tons of carbon-coated catalyst did not exceed any public-safety reporting requirements.
Day said the refinery doesn't have enough of the catalyst on the entire refinery site to exceed that level.
He said the toxic metals in the catalyst -- nickel, the carcinogen, vanadium and antimony -- all occur in similar concentrations in sand on the Missouri River.
Denny Larson, a refinery expert with Global Community Monitor and Refinery Reform, said he's concerned with continued re-exposure to the metals inside the affected houses and outside in places like sandboxes.
About 200 to 300 people live in the one-mile area northwest of the refinery where the cloud lingered.
The incident and others like it were reported to the State Health Department as a gesture of public notice, not because of legal requirements, said refinery spokesman Leif Peterson.
Jim Semerad, State Health Department manager of permitting and compliance, said the department will get a more detailed report next week, when the refinery files a quarterly report.
The incident did exceed standards for opacity from the refinery's main stack, said Day.
Day said the refinery had a similar upset earlier this year, but none in 2003.
Semerad said the department has looked in detail at the components of the catalyst cloud like the one that left the refinery last month.
He said hazardous-material cleaning is not required and there is no adverse affect to people or pets or from eating garden vegetables coated with catalyst residue.
Semerad said the releases, or catalyst upsets, could trigger enforcement action if they were a frequent occurrence.
He said the good news is that the refinery will be able to control them with the new wet scrubber.
Trapping catalyst material will be incidental to the scrubber's main function of removing most of the 4,800 tons of sulfur dioxide the refinery emits annually.
That emission rate compares to nearly 45,000 tons of sulfur dioxide emitted from the un-scrubbed Leland Olds Station at Stanton.
During a July 29 special session, Mayor Lawrence Leyens and Alderman Sid Beauman voted to authorize the city's inspection department to spend $10,000 to remove the tanks.
The city hopes to take bids the week of August 1 and complete the removal in a month, said Victor Lewis, who heads the inspection department.
Lewis estimated the site had 17 tanks capable of holding several hundred thousand gallons. He said he will get a definitive number after meeting with engineers. All the tanks may contain hazardous materials.
Two of the tanks broke free during the flooding that followed an 8-inch rain in April 2003.
State law allows a city to spend only $10,000 per calendar year on a cleanup project. Even after the tanks are removed, portions of the refinery will remain. Leyens said the city would tackle the rest of the site when they were legally able.
"The worst-case scenario is everything will be gone within two years," he said.
The special meeting was held because there was some confusion regarding the city's liability if environmental toxins were found during the cleanup. Leyens said that issue has been cleared up and the city would not be held responsible.
Barrette Refinery declared bankruptcy in February 1996. It never emerged from the process, and the case was closed in April 2003.
Howell Refining Inc. of Chicago bought the property in 2001 and paid no taxes. The company owes more than $23,000 in back taxes.
The property was sold in a November tax sale to a Mississippi-based property company that has done nothing with the property, Leyens said.
"They didn't know what they bought," he said.
A $10,000 lien will be placed on the property, so a new property owner would have to pay the lien, in addition to back taxes, to take possession of the property. If no one buys the property, it will go to the state. In that case, the city will not be reimbursed for removing the tanks.
Venezuela's State Oil Co. Receives Offers
Venezuela's state-owned oil company has received offers from bondholders for more than $2.4 billion in a debt buyback the company announced last month, an official said July 13.
Approximately 96 percent of the $2.6 billion in bonds that Petroleos de Venezuela S.A. offered to buy back from bondholders were submitted by an early deadline of July 12, said Jose Rojas, the company's vice president in charge of finance.
PDVSA offered an extra $1 to $3 per $100 face value for bonds sold until July 12.
The repurchase of papers will continue until July 26, and the company hopes to buy back almost half its debt, which is more than $6 billion, Rojas said.
J.P. Morgan and Deutsche Bank are managing the transactions.
Rojas said the repurchasing of bonds would allow PDVSA to free $5 billion in collateral that was used to back the bonds. This amount would then be used for new investments.
Rojas said that PDVSA was negotiating a loan for up to $3 billion with Japanese agencies and banks for the development of new petrochemical and gas projects.
Rojas denied that the repurchase of bonds was part of a strategy to slow the filing of the company's balances with the U.S. Securities and Exchange Commission, as some analysts have claimed.
PDVSA obtained an extension to report 2003 results to the SEC. Results originally were due June 30.
"We are not avoiding any controls," said Rojas, who insisted results would be filed in the next few months.
Rojas said the delay was due to a two-month oil strike which began in December 2002 and slowed the company's accounting.
It is the second straight year that PDVSA has missed the deadline. Last year, the company asked for two extensions before filing its 2002 financial results in October.
PDVSA is required to file with the SEC because several wholly owned units operate in the United States.
Venezuela is the world's fifth oil exporter. The government says it produces more than 3 million barrels of oil a day. Analysts say the figure is closer to 2.5 million barrels per day. As a member of the Organization of Petroleum Exporting Countries, Venezuela's quota is 2.9 million barrels per day.
Venezuela's Energy and Mines Minister Rafael Ramirez denied July 13 that the country's production had declined because of a lack of investment, as recently reported by the International Energy Agency.
2. ASIA
Oil Refinery Upgrade Gets the Green Light
Caltex will forge ahead with an upgrade of its Brisbane refinery despite concerns over the toxic effects of the sulfur dioxide it will generate.
Brisbane City Council yesterday voted to allow the expansion after Lord Mayor Campbell Newman had previously publicly berated Caltex for not including a sulfur recovery unit – a device that traps sulfur emissions – in its planned expansion at Lytton.
Caltex's move to refine low sulfur diesel was a response to Federal Government regulations coming into force in January, 2006, which will require producers to manufacture diesel with a sulfur content one-tenth of current production levels.
It means more sulfur will be extracted from the crude and more sulfur dioxide will be generated.
Caltex's plant at Kurnell, south of Sydney, was, in contrast, being fitted with an SRU.
Cr Newman said Caltex was out to save between $11 million to $25 million by not building a SRU at its Lytton refinery. But Caltex has now convinced the council the amounts of sulphur dioxide to be generated in the refining process will be insignificant.
Council's Development and City Business Committee this week approved the refinery extension on condition Caltex provide the council with detailed modeling of its sulfur dioxide emissions and that the petroleum giant closely monitor them.
Caltex has promised it will build a sulfur recovery unit if the modeling or monitoring deemed it necessary.
Wynnum North resident Jon Chevalley is "outraged" that the petroleum company has been given the green light.
"It's a bit wrong in my opinion," said Mr Chevalley, whose backyard overlooks the refinery.
"This is a company that makes billions in profits, yet is too cheap to outlay a relatively small amount to ensure the safety of the community."
Mr Chevalley cannot see the logic of allowing the refinery to begin producing low sulfur fuel, and then assessing whether the emissions would be dangerous.
"What's the difference between putting one in now and in two years time?" he asked.
"Why run the risk in the first place? I think we (residents) should have been asked our opinions on the matter first.
Caltex told The Courier-Mail in May that the Lytton plant would not need a unit because it was using crude oil with a much lower sulfur content compared to its Kurnell plant.
Caltex sourced its Brisbane crude oil supplies from New Guinea, Vietnam, South-East Asia and throughout Australia, and the level of sulfur in the local crude oil content was already low at between 500 and 600 parts per million.
The company said this was lower than the sulfur level in Sydney-bound crude sourced from the Middle East.
Speaking at this week's council meeting, Cr Newman said Caltex had agreed to "very tough development conditions".
"It means that the project can go ahead, and that's a great thing for southeast Queensland," the Lord Mayor said.
Fire crews were called to the Shell fuel refinery at Corio, near Geelong, July 8, following a propane leak at the site.
The Country Fire Authority (CFA) sent five trucks and 25 firefighters after the leak, in a tower at the site, was reported to them at 9.06am.
The leak was not major, but firefighters evacuated refinery workers from the area surrounding the tower as a precaution.
CFA spokesman Peter Philp said the large firefighting contingent was standard for any safety issue at the refinery.
"It (the leak) is only listed as minor, but as part of our safety plan we always dispatch a number of trucks," he said earlier.
Mr Philp said refinery workers were able to isolate the leak by reducing pressure in some of the pipes.
ExxonMobile Faces Refining Moment
Two old boys from Christian Brothers at St Patrick's College in Ballarat now occupy positions which, respectively, are amongst the most powerful political and business positions in the nation.
One is Steve Bracks, the Victorian Premier. The other is Mark Nolan, recently appointed chairman of the Melbourne- based and US-owned ExxonMobil Australia.
Sometime in the next couple of months Nolan will place a phone call to his old school chum Bracks (same year) to let him know whether ExxonMobil's Altona oil refinery, in Bracks's Williamstown electorate, lives or dies.
It is a decision that has ramifications for the entire Australian oil refining industry, an industry of national strategic importance, given the nation's growing dependence on imported fuels.
The jobs of 400 workers, from what is Melbourne's economically deprived west, are also at stake.
Nolan will either commit ExxonMobil to spending several hundred millions of dollars at Altona to meet the Federal Government's 2006 clean fuel standards, or he will sound its death knell as a major player in the fuel products market.
In an interview after 10 weeks in the top job, Nolan is non-committal on the issue.
ExxonMobil is "working very hard" on the issue, as is the workforce, which Nolan says has done some excellent work on reducing costs. But he leaves the question of Altona's future hanging.
"We have not made the decision to invest in the clean fuels project," Nolan says. But he does concede that, given the "critical pathway" that needs to be followed to meet the 2006 clean fuel target, a decision is close at hand.
"We expect to make the decision in the third quarter this year," he says.
If the greatly improved margins being enjoyed by the oil refiners could be relied on to continue, the decision to invest in Altona's future would be made easier.
Altona is Australia's second-biggest refinery, with a daily processing capacity of 135,000 barrels of oil or about 15 per cent of the nation's total capacity.
Australia's other oil refiners - BP, Caltex and Shell - have either made the necessary investment to meet the 2006 fuel standards or have announced plans to do so.
Nolan would not detail the capital cost of the Altona project, saying that the company was studying a "whole range of different engineering options and throughput rates".
That raises the prospect that, rather than the death knell, ExxonMobil could well be planning a smaller but more focused role for Altona, one possibly geared solely to the marine and aviation fuel markets.
A mechanical engineer graduate from Melbourne University in 1975, Nolan was previously production operations director for ExxonMobil's Esso division.
It is an ideal background to have when it comes to dealing with another big issue facing ExxonMobil's Australian operations: the rapid decline in Bass Strait oil production.
In the past 30 years, the ExxonMobil-managed 50-50 joint venture with BHP Billiton has produced 4 billion barrels of oil and 5 trillion cubic feet of gas.
There is still plenty of gas left, probably as least as much again. But 90 per cent of the oil has been produced and the ageing oilfields are in rapid decline.
Daily output (100 per cent basis) is now running at no more than 125,000 barrels of oil, down drastically from the 550,000 barrels daily average of the mid-1980s.
To mitigate the decline, the Bass Strait partnership has spent $80 million on seismic surveys to identify new oil pools, as well as to top up gas reserves. But there are no 1 billion barrel oilfields out there any more.
"We are chasing fields that we think are in the order of 10 to 50 million barrels. We don't assess that there are any large fields left, unfortunately," Nolan says. "So we will continue to see that decline [in output]. We won't be able to offset it."
The upside to that is, because of the existing production facilities and pipeline infrastructure, relatively small fields can be economic propositions.
The first well in what could be a 12-month program was recently drilled on the West Whiptail prospect. It was drilled on a tight-hole basis, meaning the results will be reported when its suits the partnership to announce them.
Nolan does say that there were three other structures previously drilled in the region (Mulloway, Whiptail and East Whiptail).
"So there there are four structures there close together. We are seeing what sort of development we can make out of that," Nolan says. But again, the last of Bass Strait's big oilfields were developed a long time ago.
Faced with the continued decline in Bass Strait oil production, the partnership can at least look to another 30 years or more of gas production. But the annual production profile remains flat at about 500 million cubic feet a day because of competition from new supplies in the offshore Otway Basin.
ExxonMobil's big growth opportunities in gas rest with its North-West Shelf gas interests (14 per cent of Gorgon and 50 per cent of Jansz) and its 40 per cent stake in the Hides gasfield in Papua New Guinea, part of the PNG-Queensland gas pipeline project.
Nolan says the Gorgon LNG project is now taking bids for front-end engineering design work, while the less advanced Jansz - the biggest ever gas discovery in Australian waters - was the subject of a recently completed seismic survey.
Both projects are being pursued as liquefied natural gas export projects. "The North American west coast, along with Korea, Japan and China, offer a great opportunity for Australian gas, in particular the ExxonMobil portion of that gas," Nolan says.
"We are well positioned to play an important part in any of those markets."
But at this stage, ExxonMobil's LNG ambitions do not include the big Scarborough gasfield on the North-West Shelf, half owned by BHP Billiton.
BHP Billiton has made a song and dance about the field being the supply source for gas it plans to supply to a floating LNG plant offshore from California. But Nolan says ExxonMobil has "no near-term plans to progress Scarborough".
However, ExxonMobil has agreed to let BHP Billiton undertake a seismic survey of Scarborough as part of the early planning for the remote field's eventual development.
Nolan also makes clear ExxonMobil is not about to be stampeded into making an early commitment to the $US80 million ($113 million) front-end engineering study and design work needed to get the PNG-Queensland pipeline project moving.
"We are working very hard with Oil Search, the PNG Government and potential customers to commercialise that opportunity. But we see a necessary step being the signing of customers beforehand," Nolan says.
He adds that 150 petajoules of committed annual gas will be the "minium requirement" if ExxonMobil is to commit. That leaves Oil Search and the PNG Government to continue to press for a go-ahead on the project's front-end engineering and design (FEED), arguing it is only then that customers will sign.
"FEED is the next critical decision. But we are waiting to shore up the customer base before we make a decision. The important principle here is that we are going to proceed when we've signed up a minimum amount of customers," Nolan says.
China Government Agency OKs Study on Planned Sinopec Refinery
China Petroleum & Chemical Corp. (SNP), or Sinopec Corp., is one step closer to building a 10.60 billion yuan ($1=CNY8.28) refinery in Qingdao city, Shandong province, following the recent approval by a government agency of the refinery's feasibility study.
The state-run China International Engineering and Consulting Corp., which assesses the feasibility of major industrial projects, has approved Sinopec's 10 million metric-ton-a-year refinery.
However, Sinopec still needs the final go-ahead from the central government before it can begin construction, a Sinopec official said July 26.
If the project is approved, the company plans to begin construction later this year and has decided to construct the refinery on its own, ruling out the possibility of cooperating with foreign companies for crude supplies, the official said.
However, Sinopec and the Shandong provincial government will cooperate on closing some of the 21 independent refineries in the province to avoid excess refining capacity. These refineries have a total capacity of 7 million to 10 million tons a year.
Sinopec has signed an agreement with the Shandong provincial government on closing the independent refineries, the company official said, "but that hasn't proceeded smoothly."
Sinopec has taken measures to help close these small refineries by reducing crude supply to them. Normally, the crude for these refineries comes from Sinopec's largest oil field, Shengli, in Shandong, which produces about 27 million tons of crude annually.
Some of the small refineries have tried to merge to avoid closure.
A source said the small refineries have survived Sinopec's reduced crude supply by obtaining heavy crude from offshore oil fields in the Bohai Sea and Liaohe Oilfield in the northeast, and some small refineries are also importing more fuel oil from South Korea to process or blend into diesel to offset the reduced local crude supply.
However, Sinopec's construction plans won't be delayed as there is sufficient time to close the independent refineries since Sinopec's refinery is scheduled to begin operations only in two to three years' time, the official said.
According to an agreement reached in August 2002, Sinopec will hold an 85% stake in the new refinery, while the Shandong government will hold 10%, and the Qingdao government 5%.
Sinopec is keen on building a large refinery in Qingdao because the government plans to establish strategic petroleum reserves there.
Currently, Sinopec operates a crude oil terminal in Qingdao that can handle crude tankers of up to 250,000 tons, and a crude tank farm with a storage capacity of 2 million cubic meters.
CNOOC to Build 16b Yuan Refinery in South China
Chinese energy giant CNOOC Group is to build a 12 million ton-per-year oil refinery in southern China with investment totaling 16 billion yuan (S$3.3 billion), the company confirmed July 28.
'The project has been approved by the State Council (China's cabinet), but CNOOC is still awaiting official approval from the council's Development Reform Commission,' company spokesman Li Dongsheng said.
Mr Li said construction would be completed before 2008. The refinery will be located near the group's mammoth petrochemical joint venture with Anglo-Dutch oil giant Royal Dutch/Shell in Daya Bay in Huizhou city in Guangdong province, China Daily said.
'It will turn the country's third oil firm into an integrated one providing upstream and downstream products,' it said.
The paper quoted a company spokesman as saying that Daya Bay was an 'ideal location' because the refinery could provide raw materials needed by its joint venture's ethylene project.
He added that positioning the plant at Daya Bay could result in total savings of up to US$100 million for both the refinery and the ethylene venture.
The products of the refinery will mainly be marketed in southern China.
Essar Oil to Raise $207 Million Via FCCB
Essar Oil Ltd has decided to raise $207 million through the issue of Foreign Currency Convertible Bonds (FCCB), the company has informed stock exchanges on July 5.
The funds will be utilized for completing its 10.5-million-ton refinery under construction in Vadinar, Gujarat. The work on the refinery has been resumed recently. According to a company official, CLSA Hong Kong has been appointed as the lead arranger. The issue has been approved by the company's board meeting.
MRPL Penex-Plus Technology to Meet India's National Auto Fuel Policy Emissions Standards
UOP has announced that MRPL plans to add a Penex-Plus(TM) unit with a DIH column to its naphtha complex in Mangalore, Karnataka, India, to produce premium, high-octane isomerate for ultra-clean gasoline that will meet the emission standards set by India's National Auto Fuel Policy.
The basic engineering work for the 13,200 BPD isomerate project started in February 2004. UOP designed MRPL's hydrocracker-based refinery, and has continued to provide technical support services since the refinery started up in 1996.
Mangalore Refinery and Petrochemicals Ltd. (MRPL), a subsidiary of Oil and Natural Gas Commission (ONGC), is an important supplier of high quality fuel products in India. MRPL's Mangalore Refinery has a current design capacity of about 9.7 million tons per annum of crude. The refinery is presently operating at an annualized capacity of 11.15 million tons. ONGC, an oil exploration and production company, recently acquired a large stake in MRPL. The entry of ONGC into the downstream business of refining and marketing of petroleum products marks the creation of the first integrated oil company in India.
UOP LLC, headquartered in Des Plaines, Ill., U.S.A., is a leading international supplier and licensor of process technology, catalysts, adsorbents, process plants, and consulting services to the petroleum refining, petrochemical, and gas processing industries.
BPCL Plans to Double Product Exports in 2005-06
State-run Bharat Petroleum Corp Ltd (BPCL) plans to raise exports of refined products to 1-1.2 million tonne in 2005-06 from an expected 500,000 tonne in the year ending March 2005, company officials said.
BPCL would raise exports as its refinery, which currently processes 180,000 barrels per day (bpd) of crude oil, would be upgraded to 240,000 bpd by March, said the company's chairman Sarthak Behuria.
Naphtha and fuel oil would be the main products it would sell overseas although some amount of diesel may also be sold, depending on domestic demand for the fuel.
BPCL aimed to sell refined products primarily in the domestic market and would export only the surplus, he said.
The company's subsidiary, Numaligarh Refinery Ltd, also has plans to export diesel to neighboring Myanmar, but would do so only if it got a good price, Behuria said.
Earlier this year, Petroleum ministers of the two countries met in New Delhi to discuss the prospects of India transporting diesel by road or pipeline and importing natural gas from Myanmar.
Indian officials said in March that exports would begin by June and that about 125,000 tonne of diesel would be sent by road to Myanmar in fiscal year 2004/05.
Behuria, who is also the chairman of Numaligarh Refinery, said the company was ready to export up to 30,000 tonne a month, but Myanmar had not offered a good price of diesel.
"By exporting, if I can get what I am getting currently (in the domestic market) then I will export. If I get less, no," he said.
India's exports of refined products have been rising in recent years as the country's refining capacity has risen faster than local demand. Exports of refined products rose 40 per cent to 14 million tonne in 2003-04.
Apart from BPCL's plans to raise capacity, Indian Oil Corp plans to add 120,000 bpd at Panipat, while Hindustan Petroleum Corp plans to add 10,000 bpd and Essar Oil hopes to build a 120,000-bpd refinery by the end of 2005.
"Unless domestic demand increases significantly, the pressure to export will continue," a BPCL official said.
India, once Asia's largest diesel buyer, became an exporter after Reliance Industries set up its mammoth refinery in the late 1990s. The refinery now processes 660,000 bpd.
IOC Closes Down Numaligarh Refinery
Indian Oil said on July 28 it had raised output at its Guwahati and Bongaigaon refineries as more crude was available after the shutdown of another refinery in the region due to floods.
A company official said crude output in Assam state was normal despite floods. Numaligarh refinery in Assam state was shut down due to floods.
RIL Plans World's Largest Refinery in AP
Reliance Industries, India's largest private sector company, has committed to set up a refinery complex in Kakinada in Andhra Pradesh.
The proposed refinery will be bigger in terms of investment than the company's refinery in Jamnagar, which is the world's largest grassroots refinery.
In an exclusive interview with Business Standard, Andhra Pradesh Chief Minister YS Rajasekhara Reddy said Reliance Industries chairman Mukesh Ambani had met him in Mumbai and indicated the company's willingness to invest in a refinery in the state.
"Reliance has promised a scenario bigger than Jamnagar in the next three years," Rajasekhara Reddy said. "We are insisting that any raw material tapped in the state has to result in maximum benefit to the state, and Reliance has agreed," Rajasekhara Reddy said.
Reliance had set up the Jamnagar refinery in Gujarat at a project cost of $3.4 billion.
Rajasekhara Reddy indicated the state government was working on a blueprint, to be released in a month, to revive the 38,000 sick units in the state.
"We are keen on reviving the sick industries and ensuring that fresh capital is found and infused into these units," Rajasekhara Reddy said.
The Tata Group had also, according to Rajasekhara Reddy, shown interest in handloom marketing in the state. "Details of the nature of their relationship with the government are yet to be worked out," he said.
The broad priority of his government, the chief minister said, was to ensure that general productivity across industries rose.
"Businessmen need not have any apprehensions that we will neglect their interests and focus only on the farmer. What we are doing is setting right the imbalances that happened in the past. The farming sector was hitherto neglected, but we will ensure that all the other sectors will be worked upon and given due importance," he said.
BPCL to Update Mumbai Refinery
Bharat Petroleum Corporation Limited (BPCL) has embarked on a Rs 1831-crore refinery modernization project (RMP) at its facility in Mumbai. The project will have two components of capacity enhancement and upgrading of refinery processes in order to produce Euro III compliant auto fuels.
Director (refineries) M Rohtagi said that Rs 1,300 crore has already been spent. The modernization plan is expected to be over by the fiscal-end. The plan involves enhancing the refinery capacity to 12 mtpa from the existing about 9 mtpa.
BPCL sells about 20 mt of products out of which only a small share comes from its refinery in Mumbai. The remaining demand is met from its subsidiary refining companies based in Kochi and Numaligarh.
The company is planning to widen the range of crude its refinery can process. The Mumbai refinery was originally designed to handle crude from Bombay High which is sweet (lower sulfur content). However, the refinery has been processing less crude from Bombay over the years. At present, its refinery is using only about 4 mt of Bombay High crude compared to over 6 mt in 1992.
The company imports most of its crude requirement and is now considering approaching countries like Angola and Libya. “We have received offers from Australia but freight is an issue,” he said.
The Mumbai refinery now in its 50th year of inception is aiming at reduction of source emission. The sulfur content at the end of the modernization project will stand reduced to 0.015 per cent in motor spirit (petrol) and 0.035 per cent in diesel.
After RMP it is estimated that additional investment of Rs 1200 crore would be required to meeting Euro IV requirements. Besides RMP, the company is also going in for Rs 110 crore plan for cracking reforming unit. This is also expected to be completed by the year-end.
Mangalore Refinery Capacity Being Enhanced
The installed capacity of Mangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of exploration major Oil and Natural Gas Corporation (ONGC), is being enhanced from 9.7 million tonnes a year to 12 million tonnes.
"The refinery will be de-bottlenecked to raise the capacity to 12 million tonnes per annum," said ONGC chairman and managing director Subir Raha on the sidelines of a conference on July 14.
"Since our acquisition, operation of the refinery has improved and it is running at 20 percent above installed capacity, processing 12 million tonnes of crude.
"We plan to run beyond capacity throughout the year, with a minor shutdown in the second quarter for maintenance," said Raha.
The project for enhancing the installed capacity is expected to be completed by 2006.
With a refining capacity of 118.46 million tonnes, India is currently exporting an increasing amount of petroleum products even as fresh capacity is being created in the country either through enhancement of capacity or green-field projects.
ONGC has also earmarked Rs.5 billion (about $110 million) for improving the quality of petroleum products like petrol and diesel, in keeping with the government's new norms to meet higher environment standards.
The refinery, which returned to profitability in the one and a half years since coming under the ONGC, is investing Rs.1.5 billion on other small projects as well.
MRPL is the only refinery utilizing the crude being brought to India from Sudan's Greater Nile Project, in which ONGC's overseas arm has acquired a 25 percent equity stake and gets around three million tonnes annually as its share.
"Of our total share of the Greater Nile project crude, we plan to bring between 0.25 and 0.5 million tonnes of crude to India for processing at MRPL and the rest is to be sold overseas," said Raha.
Dependent on imports for 69 percent of its crude requirement, India through ONGC and other state-owned energy majors has been acquiring equity stake in overseas exploration blocks to secure supplies.
IOC to Modernize Refineries Overseas
Indian Oil Corporation (IOC) is planning to take up the modernization of Eden (Yemen) and Mombassa (Kenya) refineries, besides entering into a memorandum of understanding with Nigeria’s Edo province for setting up a refining facility.
IOC proposes to create special purpose vehicles to undertake the modernization and revamp projects, including those in Iran and Libya. The funding mechanism for the projects, estimated to cost $4 billion, will be worked out separately, company executives said.
The MoU with Edo is expected to be signed next month, which would be followed by negotiations for concessions, including getting equity oil in the province, a senior company executive told Business Standard.
The IOC board has already cleared the proposal and the oil major is already in the process of bidding for the modernization of another Nigerian refinery.
IOC has also been offered two refinery modernization projects in Libya at an estimated cost of around $1.2 billion. The modernization would be done on a joint venture basis for which IOC has submitted the expression of interest and will undertake due diligence shortly.
“We can even acquire a majority stake in these two joint ventures. With Libya being close to Europe, the upgrade of the two refineries will help us in getting access to the European markets,” an IOC executive said.
The company is also expecting the award of modernization projects for Teheran and Tabriz refineries in Iran on nomination basis. The $1 billion project is close to finalization and IOC is in the reckoning with Engineers India Ltd.
A crude swap arrangement will also have to be worked out involving the availability of Iranian light, in return for Caspian crude of around 240,000 barrels per day that is currently available.
In case of the Eden refinery, which produces large quantities of furnace oil, the project expected to be in the region of $500 million, entails upgrade for the production of gas oil, which will be marketed in Yemen itself, since the country is deficient in gas oil.
In case of the Mombassa refinery, where negotiations are at an early stage, the company is going to commence technical feasibility studies shortly.
Japan Oil Refinery Joint-Venture Set Up
Japan's biggest oil refiner Nippon Oil Corp. and the PetroChina-affiliated China Oil have agreed to form a joint-venture, the first of this kind established by Japanese and Chinese companies, to refine crude oil and sell refined oil products to both markets.
Under a nine-month contract signed on July 5, crude oil, mainly imported from the Middle East, will be shipped to the Japanese company's six oil refineries in Japan to be processed into naphtha, kerosene, light oil and fuel oil. China Oil will supervise the export of these products to the Chinese market.
During the contract's period of validity, Nippon Oil Corp. is expected to refine 20,000 barrels per day or 2 percent of the Japanese company's refinery capacity.
Foster
Wheeler Secures Project Management Consultancy Contract for Clean Fuels Upgrade
Project in Korea
Foster Wheeler Ltd. (OTCBB:FWLRF) announced July 28 that a subsidiary of Foster
Wheeler Limited (England) has been awarded a project management consultancy
contract by Hyundai Oilbank Co., Ltd. (HDO) for a 200 million clean fuels
upgrade project at the Hyundai Oilbank Refinery at Daesan, 130 kms southwest of
Seoul, Korea. The value of Foster Wheeler’s contract was not disclosed. The
booking was included in the first quarter.
“We have been involved with this refinery since the late 1980s, when it was
known as the Kukdong refinery, and we are delighted to continue our
long-standing relationship,“ said Steve Davies, chairman and chief executive
officer of Foster Wheeler Limited (England).
“We are committed to helping Hyundai Oilbank realize its objectives for this
fast-track project to meet new Korean legislation by bringing to the project our
extensive worldwide clean fuels experience, along with our successful track
record in project management consultancy.”
This clean fuels project will include a new plant comprising a third 25,000
barrels per day (bpd) gas oil (heating oil) hydrotreating unit, a 20,000 bpd
motor gasoline (mogas) hydrodesulfurization unit, and a 40 million standard
cubic feet per day hydrogen manufacturing unit. It will also include the revamp
of the second existing 35,000 bpd gas oil hydrotreating unit, plus minor
offsites and utilities works.
This investment will reduce the sulfur content of the mogas from the
hydrodesulfurization unit from 200 parts per million (ppm) to 30 ppm and the gas
oil from the new gas oil hydrotreating unit to 10 ppm. This is being undertaken
in compliance with the Korean government’s environmental legislation, which
comes into effect on January 1, 2006.
Foster Wheeler
Ltd. is a global company offering, through its subsidiaries, a broad range of
design, engineering, construction, manufacturing, project development and
management, research and plant operation services. Foster Wheeler serves the
refining, upstream oil and gas, LNG and gas-to-liquids, petrochemical,
chemicals, power, pharmaceuticals, biotechnology and healthcare industries. The
corporation is based in
Hamilton,
Bermuda, and its operational headquarters are in
Clinton,
New Jersey, USA.
LG Caltex Refinery in South Korea may Delay Resuming Operations
South Korea's second-largest oil refinery, which closed July 19 because of labor unrest, will be unable to resume operations for up to 20 days, a company official said July 21.
Unionized workers at LG Caltex took over some control rooms at the company's plant in Yeosu, near the southern coast, as part of a strike that began the week of July 18.
They left after the 650,000-barrel-a-day plant was forced to shut down.
Company officials were preparing to resume production with non-union workers and retirees.
"We are assuming that it will take another 20 days to put the facilities into operation. Depending on the situation, it can take less than that or even longer,'' said Lee Sang-hun, an official at LG Caltex.
"We will have to see how the negotiations with the labor union will proceed.''
LG Caltex, which provides 30 percent of the nation's oil supply, says it still has oil reserves for about two weeks.
"There are no worries about the nation's oil supply, though,'' Lee said.
"We are trying to restart the refinery as soon as possible, and even if we run out of oil reserves, there is still the oil reserve from the government that can be provided to us.''
Striking workers are demanding higher pay and shorter working hours.
Company officials hope that union members will start to return to their jobs once production lines are running.
Out of 2,700 employees at the plant, about 1,100 workers belong to the union. Nearly 1,000 union members are on strike.
LG Caltex is supplementing its workforce at the plant with 400 office workers, non-union members and retired workers.
South Korea is heavily reliant on imports for its fuel supply.
The SK Enclean company runs the biggest oil refinery in South Korea.
3. EUROPE / AFRICA / MIDDLE EAST
Grupa Lotos Unveils its Plans for Southern refineries
Grupa Lotos, one of the leading domestic refineries, revealed its plans concerning three southern refineries which will officially join its structures next year.
The refinery in Jasło is to become the main center for processing scrap material, the Glimar refinery will focus on production of petrochemicals, while the Czechowice-based venture will be responsible for transport and distribution. The restructuring process of the refineries will take two to three years and, according to company representatives, will not result in layoffs. "Within two years we want to have 150 gas stations in the southern part of the country. We currently own around 50. The development of the network will be partly conducted through franchising, although it will not be easy to obtain a Grupa Lotos logo," said Paweł Olechnowicz, the president of Grupa Lotos.
Shell to Shut Dutch Refinery Unit in September
Royal Dutch/Shell Group will close a oil-processing unit at its 390,000 barrel-a-day Pernis refinery in the Netherlands in September for four or five weeks of maintenance, Reuters reported, citing an unidentified spokesman.
Shell's maintenance on the so-called crude distillation unit takes place every four years and will cut production by 195,000 barrels a day, the newswire said.
Maintenance turnarounds in the coming months are also scheduled for BP Plc's 400,000 barrel a day Rotterdam plant and Total SA's 149,000 Vlissingen, Netherlands plant.
UOP Signs Agreement with Pancevo Oil Refinery for Modular CCR Regenerator
UOP Limited and NIS Oil Refinery Pancevo signed an agreement today for UOP to supply a modular CCR(TM) regenerator including a Continuous RVG Chlorsorb(TM) system for NIS Oil Refinery Pancevo's naphtha complex in Yugoslavia. The naphtha complex will include a new CCR Platforming(TM) unit and a Par-Isom(TM) unit with a DIH fractionator converted from an existing fixed-bed reformer. These new process units will upgrade and modernize this facility to meeting Euro 5 gasoline standards.
The Par-Isom process produces high octane gasoline blending components from light naphtha. UOP has licensed more than 200 light naphtha isomerization units including ten Par-Isom units. The CCR Platforming process is the premier reforming process for the production of high octane gasoline with more than 180 units in operation world-wide.
The Continuous RVG Chlorsorb system captures chloride from the vent gas and recycles the chloride back into the process, decreasing chloride consumption. The Chlorsorb technology provides a cost effective alternative to traditional regeneration vent gas caustic scrubbing, by reducing capital, operating, maintenance, and spent caustic disposal costs. The modular CCR regenerator is delivered as a complete, high-quality equipment system designed to be built and installed efficiently. UOP has designed or delivered more than 35 modular CCR regenerators.
Naftna Industrija Srbije (NIS) Oil Refinery Pancevo is a leading supplier of refining products in the Federal Republic of Yugoslavia.
UOP LLC, headquartered in Des Plaines, Ill., is a leading international supplier and licensor of process technology, catalysts, process plants and consulting services to the petroleum refining, petrochemical and gas processing industries.
Indian Oil in Race for Nigerian Refinery Deals
Indian Oil Corporation (IOC) is in the $20-million race for refinery maintenance contracts in Nigeria.
Senior IOC officials said that the contracts would also enable IOC to test the Nigerian waters as it has been offered a stake in a new refinery to be set up in the African country.
The maintenance contracts pertain to two refineries and each deal is worth $ 10 million. If IOC bags the contract, it will have to station its teams in Nigeria and they will oversee the running of the refineries over the period of the maintenance contract, which could be a year or so.
While IOC has also been offered the opportunity of investing in a refinery project in Nigeria, it is in no hurry to rush into the project due to the political unrest in the country.
A senior IOC official said IOC would have to proceed in “a guarded manner when it comes to investing in Nigeria. Political stability in a country is of paramount importance when it comes to overseas investment”.'
Taking up the refinery maintenance contracts, on the other hand, does not involve any long-term capital investment and is more in the nature of a knowledge-based exchange. It will also enable the company to get a first-hand feel of the country.
Apart from IOC experts moving from India to Nigeria, some locals will also be hired to help out in the project if the contract comes through.
IOC with its vast expertise in running refineries has been taking up similar contracts in the middle-east as well. IOC has a technical services agreement with Emirates National Oil Company, Dubai, which has been renewed for the sixth year in a row.
It also has a manpower agreement with the company, which has been renewed for the fifth consecutive time.
Similarly, IOC is implementing an integrated management system for Oman Refinery Company and has also provided catalyst advisory services to Petronas of Malaysia.
Nigeria produces high-quality Bonny light crude, to which ONGC’s Mumbai High crude is also benchmarked. The price of this crude is higher than the Brent crude of the UK. IOC had entered into term contracts for crude imports with Nigeria and the country was amongst the largest suppliers to India two years ago.
However, civil strife in the country had led to the periodic disruption of supplies and, in the last two years, Indian crude imports from Nigeria have dwindled.
Chinese Businessmen to Invest $7 bn in Nigeria
Federal Government's quest for Direct Foreign Investment (FDI) into the nation's economy might have scored a major hit, as a group of Chinese businessmen are planning to set up projects worth about $7 billion in Nigeria.
Emerging details of the trade visit by the China Export and Credit Insurance Corporation, otherwise known as Sinosure, to the country, revealed that the Chinese investment would be in the area of power generation, crude oil and exploration, coal processing, setting up of an export refinery and a petrochemical plant as well as in agriculture.
Checks revealed that the Federal Government has set up a 15-member steering committee to work out modalities for seeing the proposed projects through.
The committee is headed by Special Adviser to the President on Manufacturing and Private Sector, Alhaji Abdulkadir Ahmed. Other members are drawn from both the public and private sectors and they include the Special Adviser to the President on Petroleum, Dr. Edmund Daukoru, and four other ministers.
Sinosure, the export credit agency of China, was during the visit to Nigeria led by its Executive Vice President, Dr. Liang Zhidong. The delegation met with President Olusegun Obasanjo at the State House, Abujathe the first weekend in July.
It was gathered that the Chinese investors would specifically be pumping $1.5 billion into the development of a Nigerian continental shelf oil bloc, OPL 229. The bloc is jointly owned by two indigenous oil firms, Emerald Energy Resources Limited and Amni International Petroleum.
The plan also includes the setting up of an export refinery with a processing capacity of about 180,000 barrels per day (bpd), and the construction of a petrochemical plant by a company known as SinoLink Hydrocarbon Technologies.
Officials said the oil exploration and refinery projects formed a key strategy for China to meet its rising energy demand.
"As Chinese Export and Credit Agency, Sinosure is firmly committed to guarantee the financial funding required for the total development of the OPL 229," said an official, who added that "the plan is to produce the crude in Nigeria, refine it in the country and ship directly to China to meet the upsurge in fuel demand."
The first well in OPL 229 is billed to be drilled in November this year, while production is expected to commence late next year.
It was gathered that the Chinese investors were already holding talks on the proposed projects with Emerald Energy, Diamond Bank and Africa Resources Development Company Limited (ARDCO).
Obasanjo had told the Sinosure delegation that Nigeria placed high premium on its relations with China, and that given its size and commitment to technological advancement, economic ties with China would be of mutual benefit to both countries.
Ondo to Get Refinery
A memorandum of Understanding (MoU) between Ondo State Government and a private initiative, Covenant Ground Refinery, for the establishment of a refinery, has been signed.
The refinery, to be established around the state's coastline will serve as an environmental lesson to oil producing companies in Nigeria.
The project is expected to offer about 2,000 direct jobs and another 3,000 indirect jobs.
At the signing of the MoU Tuesday in Akure, the state capital, the chairman of Ground Refinery, Mr. Wole Oyekamari, said the project would boost the state's economy. He said the refinery is estimated to cost $1.5 billion and could produce 100,000 barrels of crude oil per day.
He said a crude storage tank, product tank, one million burkering vessel and a company town comprising about 3,000 housing units would be attached to the refinery.
Mr. Oyekanmi noted that petroleum consumption demand in Nigeria presently stands at 30 million liters per day, while supply from the existing four refineries, producing at full capacity was just 18 million liters daily.
Caltex: Permit in Peril
The oil pollution in Table View on July 4 could prove to be expensive for the Caltex refinery when it re-applies for a permit to resume its operations.
Politicians and pressure groups said the incident again highlighted the urgency to review regulations regarding air pollution.
Minister of Environmental Affairs and Tourism, Marthinus van Schalkwyk, criticized management of the refinery July 5 over the oil rain and because the company did not report the incident within the time required by law. "The department will again focus on the conditions for the re-issuing of a permit to the Caltex refinery," Van Schalkwyk said after visiting the refinery.
He said the current legislation in this regard, promulgated in 1965, was outdated. The country had "an urgent need for new legislation".
The refinery and the industry in general had "fundamental responsibilities towards the community", he said.
Steve Woodruff, the senior manager at the refinery, again apologized for the accident and the fact that the company neglected to report the incident within 24 hours.
A letter will be delivered to houses in the area on July 6 in which grievance procedures will be set out. He said he was committed to a safe environment.
A special task team, made up of delegates from all three tiers of government, will investigate the environmental impact of and public interest in the incident. The public has been called on to report any environmental offenders to the department.
Link between emissions and asthma
Doctor Ivan Toms, director of health of the Cape metro council, described the incident as a "health disturbance".
"Many people who already have asthma or respiratory problems were seriously 'stressed' by the incident," he said. "The council is waiting for a complete report, which must be completed within two weeks by law, before taking a decision on the road ahead."
Legal steps were considered against Caltex last year after the lung institute of the University of Cape Town found that there was a high incidence of asthmatic symptoms and allergies among children between the ages of 11 and 14 in the northern suburbs.
A total of 3,162 children from 17 schools who live in the area north of Boundary Road in Milnerton and the N1 were involved. Of these, 23,7% had had asthma, while 64,6% had experienced hay fever.
Andy Birkenshaw, chairperson of the Table View Residents' Association and the air monitoring task team of the northern communities, said at the time that the study was the first scientific evidence of a link between the refinery and respiratory problems in the area.
This followed a battle, waged over a period of 10 years, between residents and the refinery to restrict petrochemical gasses in the area.
The refinery generates about 18 tons of sulfur dioxide a day.
Woodruff said that the plant was 40 years old this year and still "very young" compared to similar plants.
Durban to Clean up Skyline
The haze that gives Durban's skyline a muted edge, bestowing the city with a soft glow, in fact has signaled a significant increase in particulate emissions.
It is the source and concentration of these and other emissions that the council, industry and communities are hoping their multipoint plan will be able to measure and eventually resolve.
Siva Chetty, the project manager for the multipoint plan at the eThekwini municipality, said: "In the last week, particulate levels were very high. We are not sure what is contributing to it. It could be a combination of a number of sources such as the burning of sugar cane, the burning of tires, veld fires, vehicle emissions or combustion from industry."
The plan is aimed at monitoring the concentration of air pollution largely in the South Durban industrial basin, which is where many polluting industries such as refineries, paper mills and chemical storage plants are located.
When the plan was first implemented in 2000, just four monitoring stations were put up but now there are 16 that cover not only the refinery valley in south Durban, but other industrial areas, the city centre and a few outlying areas.
"It is the first time in the country that industry has come to the table to advance environmental plans. There is no legislation forcing industries to contribute but we are working on the principle that the polluter pays. Some businesses are reluctant to contribute because it affects the bottom line, but we are using persuasion and a spirit of co-operation to get them to contribute," Chetty said.
The funding of R29.5 million, which has been raised from the industry, the city and the national government, will cover the capital expenditure of monitoring stations, information technology, capacity building, two health studies and one year of operational costs.
The ongoing annual operating costs will be funded by the council through rates and industry license fees once the new Air Quality Management Act is promulgated. Of the initial R29.5 million in funding, industry is expected to contribute about one-third.
This contribution has been calculated by analyzing different types of pollution - sulfur dioxide, oxides of nitrogen, particulate matter, carbon monoxide and volatile organic compounds - and each firm's emissions of these pollutants.
The emissions are then weighted according to World Health Organization guidelines. Stack heights are taken into account as an emission from a high stack has a different impact to a lower one.
The contribution from the top 25 companies amounts to about R9 million. The next 50 companies will pay R1 million, each paying between R50 000 and R150 000.
Of the R9 million due from the top 25 companies, the SA Petroleum Refineries (Sapref), the Engen refinery, Mondi and Tongaat-Hulett sugar refinery have put in about R7 million.
Alan Munn, the sustainable business manager at the Engen Refinery, said some companies were reluctant to pay because they had not budgeted for it.
"The participation of business has never been brilliant and never that cohesive because we are all too busy running our businesses. There is no single forum that represents the whole of industry, so getting all the small businesses involved has been quite difficult. The larger businesses have already paid their share and when I talk to most of the others, they are generally willing to contribute."
The eThekwini municipality is currently talking to the provincial department of environmental affairs to make its contribution. The city has given R8 million and is committed to ongoing operational costs. The national department of environmental affairs gave R6 million, which includes a contribution of R4.5 million from the Norwegian Development Agency. The national and provincial departments of health have contributed R4.75 million.
There are two health studies to be undertaken. One is an epidemiological study, which looks at the population and what health issues it has in relation to air pollution, and the second is looking at emissions and what impact they have on health.
Munn said cancer was caused by the long-term exposure to a stressor. With the exception of benzene, which can cause leukemia, stressors are not pollutants.
Exposure to benzene comes largely from vehicle emissions.
Measurements of benzene around the two refineries showed that levels were well within international guidelines, so a high incidence of benzene-related illnesses was not anticipated, Munn said.
The biggest contributors to pollution are vehicle emissions. Here it is hoped that the national government's cleaner fuels strategy and vehicle emission controls will have an effect, but that is only likely to be evident many years down the line.
Chetty said there was still a focus on the Basin, but he was also looking at sites where traffic had an impact.
But what will be done with the information gathered?
"The data must be put to use. If we find a company is making a unique contribution, we can build in an emission reduction requirement into the company's permit," Chetty said.
Desmond D'Sa, the chairperson of the South Durban Community Environmental Alliance, said: "It is a good monitoring system but has not yet led to any action against polluting industries."
He cited an incident in April where Durban residents woke up one morning to find a huge black cloud hanging over the city. The cause was a flare at Sapref and his alliance feels Sapref should have been prosecuted.
Chetty said that even though were no detectable increases in the concentrations of emissions, flaring was an issue that needed to be resolved.
Flaring is the combustion of refinery products, which is used as a safety device when there is a failure in the power supply.
The multipoint plan is making progress in addressing the high levels of pollution in Durban, but building trust between industry and the community is a slow process that requires commitment and honesty from both sides.
Power Optimization Plan Cuts Wastage at Lavan Refinery
According to Petroenergy Information Network (PIN) following implementation of a power consumption optimization plan at the Lavan refinery in Iran, electricity wastage has remarkably reduced.
Majid Jokar, an expert with Nirou Design and Consultant Engineers Company noted that plans carried out at Lavan, Razi and Abadan refineries were among major projects implemented by the company.
"New projects are to be implemented at Khoi, Neishabour and Shahid Rajaei power plants," he said.The official noted that the company was independent with regard to design, but cooperated with Alstom, ABB and Siemens companies with regard to project implementation.
In Vacuum Distillation Tower Ready for Installation at Iran refinery
According to a report from (IRNA) a 307-ton in vacuum distillation tower with 70,000 barrels of light oil products capacity a day has been transferred to Abadan for installation at the port city’s oil refinery.
The head of the Public Relations Department at Abadan Oil Refining Company Hossein Abbasi said July 4 that the tower had been purchased for conversion of kiln oil into more valuable light products and operations for its installation in Abadan refinery will soon start by Iranian oil experts.
Abbasi said once the tower is erected and comes on operation, 70,000 barrels of light oil products will be produced a day. Belgian GNG Company is manufacturer of the tower and Iran has paid seven million dollars for its purchase. Abadan oil refinery produces about 430,000 barrels of crude oil per day.
Bazan Privatization Okayed
The social-economic cabinet approved a proposal by Finance Minister Binyamin Netanyahu and National Infrastructure Minister Eliezer Sandberg July 29 to divide and privatize Oil Refineries Ltd. (Bazan), in which the state holds a 74 percent stake. Ofer Brothers, which controls Israel Corp., holds the remaining 26% of the oil refining monopoly.
The company's Ashdod refinery will be the first to be sold to a private concern. Following a successful sale of that refinery, the remaining company and its Haifa refinery will be sold through a public issue on the Tel Aviv Stock Exchange, or to a private group, allowing the refineries to compete against each other.
The division and privatization process for Bazan must be completed by the end of 2005.
Under the decision, the state's stake and that of Israel Corp. will be sold together, with the holding company receiving up to $120 million for its shares, as stipulated in an agreement with the Finance Ministry.
Furthermore, this decision authorized Government Companies Authority director Eyal Gabbai to prepare and submit a plan for privatizing Bazan to the ministerial privatization committee by the middle of October.
Recently, Bazan chairman Ohad Marani, a former Treasury director-general, reversed his opposition to the division plan, giving Netanyahu his word to honor any cabinet decision.
Ahead of the cabinet's decision, Sandberg met with Bazan's workers' committee and discussed the planned privatization, pledging the state's support for their rights. Bazan's workers had sent a letter to Sandberg requesting to delay the cabinet decision until negotiations are completed to secure the rights of all workers before the Ashdod facility is divided from the parent company and sold.
Once Bazan is finally privatized (and divided), the oil refining sector is set for a new period of growth. The private companies to be established from the sale will at a later stage be allowed to set up and operate gas stations.
Increase in Daily Production of Aden Refinery
Daily production of oil derivatives at Aden’s refinery increased from 85,000 barrels per day during March of last year to 100,000 barrels daily during each of January and February of this year.
Statistics issued by the Marketing and Production Department of Aden’s refinery indicate that the monthly production of various oil derivatives reached 3 million barrels during January and February of this year, an increase of 450 thousand barrels from that during the same period of last year. The increase comes following the introduction of two new production units capable of refining 120 thousand barrels per day.
The department also recorded during the first week of this month an output of 8320 tons of oil derivatives marketed for local consumption.