oct 07 update

Royal Dutch Shell Group Plc expects an oversupply of global refining capacity in the near future based on announced refinery expansion projects, said Mark Williams, executive vice president of supply and distribution.

"Our view is we'll enter a period of oversupply," Williams said to reporters at a Houston energy conference.

Refiners around the world have announced refinery expansion projects to be competed between 2009 and 2012.

AMERICAS

U.S.

Marathon to Spend $2 Million to Install Air Monitor Stations

Marathon Petroleum Co. expects to spend $2 million to install air quality monitoring stations that would warn residents near its southwest Detroit refinery of environmental problems.

The monitors are part of Marathon's three year, $1 billion plan to increase refinery production in Detroit by 15 percent.

The owner of Michigan's only refinery is seeking approval from the board of directors of its parent company, Houston-based Marathon Oil Corp., to increase refinery production from 100,000 barrels to 115,000 barrels a day.

As part of that plan, Marathon said, it will erect at least five monitoring stations around the Detroit refinery to measure concentrations of air pollutants along the perimeter of the facility's fence line. The company estimates the monitoring will cost about $200,000 a year.

The information gathered by the company would be shared with the Michigan Department of Environmental Quality, as well as local emergency response units and residents.

"We're spending more than $300 million for pollution controls at the Detroit refinery," said James Wilkins, manager of the Refining Environmental & Safety division.

The Marathon expansion holds the promise of 800 construction jobs starting early next year through 2010. The project also could help stabilize fuel prices for Michigan motorists by adding about 630,000 gallons of gas a day to the market.

Marathon's plan for growth calls for the use of so-called heavy crude oil that comes from Canada's tar sands, primarily in northern Alberta. Unlike the light-sweet crude from Saudi Arabia and other places, heavy crude has a higher sulfur content and is more difficult to process cleanly. To accommodate the environmental challenges, Marathon said it plans to build additional sulfur extraction units, including a new delayed coker unit, at the refinery.

Marathon admits that the new project likely will result in as much as 30% greater air emissions (carbon monoxide and particulates) than current levels. But the nation's fourth-largest oil company said it plans to buy credits for particulates from other industrial companies to further offset the impact of the increase.

"In terms of air quality, there will be greater particulate (matter) and carbon monoxide emitted," Wilkins said. "But our emissions will be lower than what is required, and there is a lot of environmental investment that we're putting into this project."

Officials at Marathon said they have already submitted their air quality permit application with the state and expect to have a final decision by the end of this year.

Total Restarts Texas Refinery Unit, Shuts down Another

Total Petrochemicals USA restarted a unit at its 232,000-barrel per day (bpd) Port Arthur, Texas, refinery on September 8 while shutting down another for maintenance, according to notices filed with the Texas Commission on Environmental Quality.

Total's unit 813 began restarting after maintenance, according to one filing with the Commission. The restart is expected to be completed by Sept. 19.

Unit 804 was shut for brief work, according to another notice. The work was expected to be completed by September 9.

Total identifies its Port Arthur refinery units by number as opposed to function.

Valero Reports Upsets at Sunray, TX Refinery-State

Valero Energy Corp reported process malfunctions in Complex 1 of its 170,000 barrels per day (bpd) McKee refinery in Sunray, Texas, on September 7 and 9, according to notices filed with state pollution regulators.

The September 9 malfunction lasted for about 2-1/2 hours while the malfunction of the 7th lasted for seven minutes, according to the notices filed with the Texas Commission for Environmental Quality.

The McKee refinery is operating at about 160,000 bpd as it repairs damage from a February fire.

Murphy Oil’s $6 Billion Refinery Expansion Raises Lots of Questions for Wisconsin and Lake Superior

Murphy Oil Co., the Arkansas-based energy company that sells gasoline under the Spur brand, and separately under Murphy signs at about 1,000 Wal-Marts around the country runs the only oil refinery in Wisconsin.

The refinery is in Superior, on Lake Superior, where Murphy Oil produces 35,000 gallons of gasoline a day.

Murphy wants to spend $6 billion on a substantial expansion to 235,000 gallons a day.

This increase will become a matter of debate and concern, for several political and environmental reasons, given the nature of the oil refining business and Murphy Oil's headline-grabbing history:

City of Superior and Wisconsin Department of Natural Resources Web sites describe a 10-year, multimillion-dollar dredging and remediation to remove and repair petroleum and refining pollution in Newton Creek near the Murphy Oil site. The six- to seven-fold refining increase that Murphy seeks for extracting oil from thick Canadian tar sand raises additional pollution questions for the wetlands and waters near the refinery.

After proceedings in 2001 and 2002, Murphy Oil was found in federal court to have deliberately violated the U.S. Clean Air Act by withholding from state regulators the true extent of the refinery's sulfur dioxide emissions. For its violations, Murphy Oil paid a $5.5 million civil forfeiture, the largest ever assessed at that time in a Wisconsin environmental case, records show.

Murphy is paying out $330 million in settlements to property owners near its Breaux, LA., refinery after a million-gallon spill from a tank during Hurricane Katrina. If the Superior refinery expansion goes through, it would nearly be double the capacity of Murphy's Louisiana refinery.

Murphy Oil paid no Wisconsin corporate income taxes in 2003, 2004 and 2005 on profits totaling $1.8 billion in those years, according to state Department of Revenue records cited by the Milwaukee Journal Sentinel.

An effort by British Petroleum Co. to expand its Great Lakes refinery in Whiting, Ind., on Lake Michigan led to widespread criticism and BP's retreat from its plan to increase water pollution from expanded refining of Canadian tar sand oil. BP said it would continue with the Indiana refining expansion, but treat the additional toxic wastes on site.

There's every reason to think that an expansion of an oil refinery on Lake Superior -- the cleanest of the five Great Lakes, and one that supports major recreation, shipping and fishing industries -- would pose the same political and public relations problems that sent BP running for cover over its Lake Michigan refinery expansion.

Additionally, Lake Superior borders Canada, and many Canadians are not happy with certain provisions of the pending Great Lakes Compact that they see as enabling over-consumption of a shared, two-nation natural resource.

If the belief in Canada is that Americans will (or continue to) overuse the Great Lakes despite falling water levels, and add mismanagement through multiple oil refinery expansions (Marathon Oil wants an expansion at its refinery near Detroit, too), expect a backlash to the north over Great Lakes usage.

In Wisconsin, some initial pro-industry commentary about the Murphy plan frames it primarily as a job creator and a boon to Superior's economy.

But what of all the impacts on Lake Superior; its surrounding watershed and the Great Lakes as a whole?

Will there be an independent and comprehensive comparison of all the costs and benefits?

Ex-BP Manager Denies Delayed Repairs at Texas City

The former manager of BP PLC's Texas City plant where 15 people were killed in a 2005 explosion denied in testimony September 10 that repairs were delayed because of concerns over how profits would be affected.

"The production of profits did not control our schedule," Don Parus said during the first civil trial stemming from the blast that also injured more than 170 people.

Brent Coon, an attorney for four workers suing for injuries they attribute to the blast, tried to portray Parus' comments as in contrast to feelings expressed by workers interviewed for a study two months before the blast. The study, called the Telos Report, told of various safety problems at the plant.

On a large projection screen, Coon displayed sections of the report with comments from employees who said production and cost reductions were rewarded at the refinery, not safety.

"The overall flavor (of the report) is what is important to the company is production, keep all the units running. Don't shut them down until you have to. Keep making product and keep making profit," Coon said.

Parus, who is on paid administrative leave, said he was surprised by many employee comments in the Telos Report, which he had requested. He told jurors the report was the first step he was trying to take to improve the safety culture.

Parus, in his third day of testimony in a trial that could last to two months, also denied that budget concerns would prevent him from fixing units if they were seriously in disrepair. He added that he at one point went $20 million over budget to pay for unscheduled maintenance.

The explosion at the plant, located about 40 miles southeast of Houston, occurred after a piece of equipment called a blowdown drum overfilled with highly flammable liquid hydrocarbons.

The excess liquid and vapor hydrocarbons were then vented from the drum and ignited as the isomerization unit - a device that boosts the octane in gasoline - started up. Alarms and gauges that were supposed to warn of the overfilled equipment didn't work properly.

The U.S. Chemical Safety and Hazard Investigation Board, one of several agencies that probed the accident, found BP fostered bad management at the plant and that cost-cutting moves by BP were factors in the explosion.

An internal report by BP released in May said there was a culture at the plant that seemed to ignore risk, tolerated noncompliance and accepted incompetence.

About 1,350 of the thousands of lawsuits filed since the accident have been settled.

A fifth lawsuit that was also set to be tried, filed by the estate of a contract worker whose suicide was attributed to trauma from the accident, was settled just before the trial began last week.

The blast has cost the company at least $2 billion in compensation payouts, repairs and lost profit.

Conoco Sweeny, Texas Refinery to Begin Gasoline Unit Restart

ConocoPhillips (COP) told state environmental regulators that its refinery in Sweeny, Texas, planned to begin restarting a key gasoline production unit after emergency repairs.

Restart of the fluid catalytic cracker (FCC) was to begin at 6:00 p.m. CDT September 7, said the report to the Texas Commission on Environmental Quality. Emissions associated with the process were estimated to last about 24 hours. FCCs can take several days to return to normal operation after the restart process is begun.

The company shut the FCC on September 5 to repair a plug valve in the unit's reactor.

The Sweeny refinery is able to process about 247,000 barrels of crude oil a day.

Sinclair Oil Plans Expansion of Oklahoma Refinery by 60 Percent

Sinclair Oil Corp., based in Salt Lake City, plans to increase gasoline and diesel production at its Tulsa, Okla., refinery by 60 percent.

The expansion, scheduled for completion by late 2010, will include the addition of a crude distillation unit that will raise processing capacity to 115,000 barrels a day from 70,000 barrels a day, said Kevin Brown, executive vice president of Sinclair.

The announcement comes as rising labor and material costs, as well as opposition from nearby residents, is causing some refiners to reconsider expansion projects. The price of expanding the Sinclair plant has increased at least 50 percent since feasibility studies began in 2005, Brown said.

"We think it's going to continue to escalate in cost so we are trying to beat the rush," he said.

Sinclair did not release the cost of the expansion. The Tulsa Metro Chamber of Commerce estimates it to be about $1 billion, Brown said.

Valero Energy Corp. - the largest U.S. refinery - as well as ConocoPhillips and Tesoro Corp. have put on hold or canceled expansions because of higher costs, the Wall Street Journal reported June 12. BP Plc said it may scrap a $3.8 billion expansion of its Whiting, Ind., refinery because of public resistance.

Sinclair will add a new delayed coker unit, three new 150 ton sulfur plants and a hydrogen cracking unit, Brown said. The company is seeking a permit from the Oklahoma Department of Environmental quality and expects to obtain the permit late next spring or early summer, at which time construction can begin.

The expansion will allow the refinery to process heavier, higher-sulfur oils from Canada, including crude derived from oil sands that will be supplied by pipeline, Brown said.

Valero Places $33.5 Million Equipment Order with Dresser-Rand

Dresser-Rand Group Inc. has concluded an equipment contract with Valero Energy Corp. that exceeds $30 million. The Dresser-Rand equipment comprises four reciprocating compressors, two centrifugal compressors, and two steam turbines.

"We're pleased by Valero's confidence in Dresser-Rand, and we're pleased to be playing a major role in supplying rotating equipment for the company's significant expansion projects. We look forward to adding value throughout the life cycle of the equipment for this long time valued client" said Jim Heid, vice president, Business Solutions, at Dresser-Rand.

Certified GE Hot Gas Expander Helps Refineries Reduce Energy Costs

GE Oil & Gas has received GE ecomagination certification for hot gas expander technology that works with a waste gas recovery system to help refineries significantly reduce their energy costs while also lowering emissions.

The hot gas expander for GE’s Power Recovery Air Train features GE’s latest technology and meets the rigid standards of ecomagination, the GE corporate initiative to address challenges such as the need for cleaner, more efficient sources of energy, reduced emissions and abundant sources of clean water.

GE's ecomagination products are evaluated for their ability to significantly and measurably improve the customer's environmental and operating performance. The multi-tiered review process is concluded with an independent, third-party audit to ensure accuracy and thorough documentation of technological performance.

“Energy accounts for about 50% of the total operating costs for a refinery,” said Jeff Nagel, vice president-global services for GE Oil & Gas. “Wasting flue gas, which is largely air and is a by-product of the refinery processes, means wasting a tremendous opportunity to reduce energy costs and the carbon footprint of the entire refining industry. A Power Recovery Air Train equipped with a GE expander can maximize the use of this waste gas to produce the additional power a refinery needs to operate.”

An average-sized GE expander for power recovery system is designed to recover 18 megawatts of power, thus avoiding the use of the same amount of energy from the grid, which can save a refinery operator nearly $9M electricity costs each year. The technology also avoids the emissions of 244,000 metric tons of CO2 each year – the equivalent of removing 44,000 U.S. passenger cars from the roads for a year.

Compared to a system without the new GE expander, an 18-megawatt Power Recovery Train with the new expander is designed to recover more than 148,000 megawatt-hours of electricity from waste energy every year, or the amount used by 13,900 U.S. households.

Previously, power recovery air trains were equipped with older of uninterrupted run time. Benefiting from improvements in materials and aerodynamics achieved over the past decade, the latest GE expander can withstand heavy crude oil corrosion and erosion to deliver improved reliability and availability and meet the four to five year performance standard. “This capability sets our waste gas recovery solution apart from others available in the industry,” Nagel noted.

The development of the new hot gas expander technology was supported by various GE businesses including the Global Research Center. It is the third GE Oil & Gas product to receive ecomagination certification, joining the BCL 304 series centrifugal compressor and PII’s UltraScan Duo pipeline inspection tool.

“With our ecomagination program, we strive to introduce and modify technologies that will be better for the environment. It's good for nature, for people and for business,” said Claudi Santiago, a GE senior vice president and president and CEO of GE Oil & Gas.

BP Settles Four Refinery Blast Cases

Energy company BP said September 18 it had reached a settlement in four civil cases that were in the third week of a trial related to a deadly 2005 explosion at its Texas City, Texas, refinery.

"The four cases that were being tried have settled," said Neil Chapman, a spokesman for BP.

The settlements were announced in court recently, Chapman said, declining to provide details.

On September 5, the trial began in Galveston County, south of Houston. The four cases were filed by survivors of the explosion who sued the London-based company for emotional distress, loss of hearing and other illnesses.

Fifteen workers were killed and more than 100 were injured by the March 23, 2005 explosion on an octane-enhancing unit at the refinery.

BP's lawyers have said the company has settled more than 1,300 claims from many survivors who had suffered severe burns or lost limbs in the blast as well as with the relatives of those who had been killed.

U.S. safety investigators found the company's management cut the refinery's budget and failed to heed warning signs of a possible catastrophic accident at the refinery.

BP has admitted responsibility for the failures leading to the blast and has set aside over $2 billion to settle claims against the company.

The Texas City refinery, the company's largest, has a crude oil processing capacity of 460,000 barrels per day. It has been running at half its capacity since Hurricane Rita hit the Texas coast in September 2005.

Detroit City Council to Consider Permit for $1 Billion Marathon Refinery Expansion

The Detroit City Council, on September 18 was scheduled to discuss Marathon Petroleum Co.’s application for a personal property tax exemption as part of its plans to expand its southwest Detroit refinery.

Marathon plans a three-year, $1 billion, expansion with the promise of 800 construction jobs, starting early next year through 2010.

But critics have raised concerns about the environmental impact.

Marathon admits that the new project likely will result in as much as 30% greater air emissions -- carbon monoxide and particulates -- than current levels. But the company has promised to take measures to offset the impact.

The company also needs a permit from the state for the expansion project.

Shell Begins Efforts to Restore Texas Refinery Ops

Royal Dutch Shell PLC said the process of restoring operations at the 285,000-barrel a day Port Arthur oil refinery in Texas was started.

The refinery is run by Houston-based Motiva Enterprises LLC, a joint venture between Shell and Saudi Aramco. It was shut after Hurricane Humberto struck the area, causing widespread power outages.

'The Motiva Port Arthur Refinery has restored most of the power to the facility. Safety continues to be the number one priority as Motiva continues to work as quickly as possible to re-start production,' Shell said in a statement.

'We have begun the re-start sequence and are following our procedures step-by-step, re-energizing parts of the production units,' it said.

Shell didn't say when refinery operations will be fully restored.

Texas Colleges Get Grants for Refinery Training

The Galveston County Economic Alliance planned to announce that community colleges in a four-county region have secured $4.7 million in grants for training workers and creating awareness about refining and petrochemical jobs among children as early as kindergarten.

Faced with huge work force losses as baby boomers retire, highly competitive companies are showing an increasing willingness to band together to face recruiting challenges, and they are striving to reach younger and younger audiences.

The colleges collaborating on the program are Brazosport College, College of the Mainland, Lee College and San Jacinto College. Houston Community College and Alvin Community College recently joined the efforts.

The economic alliance planned to make the announcement September 18 as it released the results of a two-year economic study aimed at protecting and growing 350,000 refining and petrochemical jobs in Galveston, Harris, Brazoria and Chambers counties.

Don Gartman, president of the economic alliance, said the industry has been under pressure from global competition, government regulation, property taxes, high energy costs and poor infrastructure.

“We need continued focus on transportation solutions, from maritime to truck to rail, to reduce congestion and emissions” Gartman said.

Solutions may include development of a Gulf Coast freight rail district to move products more efficiently, he said.

He also said the region needs to be ready to capitalize on alternative energy sources such as coal gasification, liquefied natural gas, biofuels and solar, wind and nuclear power.

Motiva Expansion will Create Biggest U.S. Oil Refinery

A new capacity expansion announced in September will create the largest oil refinery in the U.S.

Motiva Enterprises, a refining joint venture between Shell and Saudi Aramco, said it plans to expand capacity at its Port Arthur, Texas refinery by 325,000 barrels/day, bringing the refinery's total capacity to 600,000 barrels/day, making it the largest refinery in the U.S. and one of the largest in the world. The expected cost of the project is $7 billion.

“The expansion is designed to strengthen our nation's supply of gasoline, diesel, aviation fuels and high quality base oils," said William Welte, president and CEO of Motiva in a company statement, adding that the expansion is equivalent to the first new oil refinery in the U.S. in many years. Texas company Hyperion Resources in July also announced plans for a new refinery, making a similar claim.

And the newly approved refinery expansion may provide the latest option for processing Canadian crude.

"Certainly they were looking at that expansion for a long period of time, and I guess from a supply standpoint, perhaps the Canadian piece folded into that," said Steve Fekete, Calgary-based senior principal with consultancy Purvin and Gertz.

In the short term, pipeline service to the Gulf Coast from Canada is somewhat limited. To serve Motiva's expansion would require nearly the entirety of a pipeline, Feteke said. However, in the long term, Canadian crude may be a viable option.

Earlier this year, Shell acquired full ownership of Shell Canada, which had operated fairly independently, despite the oil major's majority role. The company operates an oil sands business unit with production in each of Alberta's three main oil sands deposits. While some producers have found it difficult to refine the heavy crude extracted from oil sands, Shell may have a ready customer in its Motiva venture.

"The refinery has been designed for maximum crude flexibility," said Motiva Chief Executive William Welte.

Motiva intends for the refinery to get about half of its crude from each of its owners, Welte said. Shell's crude is likely to come from several of its ventures, including its oil sands projects in Canada and its Gulf of Mexico operations, he said.

Canada, already the largest exporter of crude to the U.S., may see production from its Alberta oil sands tripling to 3 million barrels a day by 2015. With such large capacities expected to come online, producers are facing increasingly complex options of where to put the oil.

Shell's Athabasca Oil Sands project, which it operates jointly with Chevron Corp. (CVX) and Marathon Oil Corp. (MRO), may expand its ability to extract the heavy oil beyond its capacity to upgrade it into more usable products, Feteke said.

Shell has considered building a refinery at Sarnia, Ontario, according to earlier reports, but the plans have not been finalized. If such a refinery were built, it could receive oil from Alberta by pipeline.

Sending the crude by pipeline to the U.S. West Coast was a popular idea several years ago. Although early discussions took place, the plans never materialized, said Purvin and Gertz's Feteke. "They never got committed shippers for that pipeline," he said.

The Gulf Coast, on the other hand, offers large refineries that are compatible with the Canadian crude, he said.

Many of the plants in Texas and Louisiana were originally designed to run grades of Mexican and Venezuelan crude, which require similar processing to those found in Canada.

Many prospects for shipping crude from Alberta to the Gulf Coast have been proposed, with most seen coming online around 2012. The proposals include a " high speed" pipeline, known as the AlTex pipeline, which could run from Alberta to Texas. Additionally, Enbridge Inc. (ENB), together with Exxon Mobil Corp. ( XOM), is also looking into a new pipeline from the Patoka, Ill., oil storage and transportation hub down to the Gulf Coast. The pipeline would likely have a 400, 000 barrels-a-day capacity and could be on-stream by the end of 2010, when Motiva's expanded refinery is supposed to be operational.

"When we look at it, just to place Canadian crude, especially synthetic crude, is going to take a new market, like the Gulf Coast," Feteke said. Analysts have suggested that Gulf Coast refiners' contracts with oil suppliers like Mexico and Venezuela are expiring, allowing the companies to act as free agents and secure crude from new sources, such as Canada.

Still, Feteke cautioned that Canadian crude volumes available to Gulf Coast refiners could be somewhat limited by new Midwestern refinery projects, which could delay a real benefit to the Gulf Coast - and the pipelines hoping to serve it - until about 2015.

Yet the consideration of using Canadian volumes at Port Arthur may be surprising. The refinery has historically run primarily Saudi Arabian grades of crude, according to a person familiar with the plant's operations.

The decision for the expanded facility to process a total of 600,000 barrels- a-day of crude, sourced from both of its owners, suggests a departure from a common refining joint venture formula, in which one partner operates the refinery and another supplies the crude.

When Motiva's Members Committee, consisting of three representatives from each owner, approved the plan September 20; it signed off on a project seen as benefiting from the ability to run a wide variety of crudes, beyond the Saudi grades currently processed at the plant.

Both parties approved the expansion - despite its increased price - because of the belief that large refineries would be the most successful in all margin environments, Motiva's Welte said.

A joint venture between Bechtel and Jacobs Engineering group will manage the project which will also upgrade the plant's pollution controls.

The investment suggests that Saudi Arabia is willing to invest in refining capacity beyond that needed to run the Kingdom's domestically produced crude.

Flint Hills’ Rosemount Refinery to Increase Capacity to 330,000 bpd

Flint Hills Resources LP, the refining subsidiary of Koch Industries Inc., will expand capacity at its refinery in Rosemount by 50,000 barrels a day by year-end, Bloomberg News reports.

The expansion will increase production capacity to 330,000 barrels a day from 280,000, said spokesman John Hofland.

The construction, which began last year, will be complete by the end of 2007. The company will be modifying an existing crude unit, Hofland said. He would not say whether current production would decrease during construction.

The additional capacity will cost about $200 million, Hofland said. Last year the company finished spending $350 million to build capacity at the refinery for ultra low sulfur diesel.

Conoco Files Flare Notice for L.A. Area Refinery

ConocoPhillips filed on September 26 an unplanned flare event notice that did not involve a breakdown for its Los Angeles refinery complex with the South Coast Air Quality Management District.

According to the notice, the Carson, California, plant of the 139,000 barrel per day (bpd) complex released sulfur oxides exceeding 500 pounds into the air between Tuesday, September 25 and Wednesday September 26.

A Conoco representative was not immediately available to discuss refinery operations.

Hyperion says Zoning, Permitting will Determine New "green energy'' Refinery Site

The head of Hyperion Resources said September 26 the Texas-based firm would build its proposed oil refinery elsewhere if South Dakota’s Union County fails to rezone its site.

"We have more than one site, and we want to do due diligence on the sites that are the finalists,'' CEO Albert Huddleston said. "If in the wisdom of the community, the leadership doesn't give us the requisite zoning, then Union County won't be a candidate.''

"We do feel South Dakota will give us a fair hearing, and that's all we can ask for,'' Huddleston said later in his first interview with a Sioux City news organization.

A rural area just north of Elk Point is a finalist for its $8 billion to $10 billion "green energy'' center. Huddleston declined to identify other sites or states under consideration, or even how many there are, other than to say, "more than one.''

The CEO said Hyperion plans to simultaneously go through the zoning and permitting process at all the sites before making a final decision.

"... the approach that we decided to do on this particular effort is different than you'd normally see,'' he said. "The current approach is that we will move forward in parallel with more than one site. The final decision will be determined by the success of the processes for the sites.''

Huddleston said he personally would have preferred to have kept Hyperion's interest in Union County under wraps for a longer period of time. He said the company decided to step forward in July because intense media efforts to uncover the mystery project, long dubbed "Gorilla,'' had fueled what he described as "unhealthy speculation'' in the community.

Hyperion has optioned about 10,000 acres in Union County, more than enough to build the energy center, he said. Because it involved a large number of land owners, the optioning attracted more public attention than at Hyperion's other sites, which involve few individual parcels.

"Fewer moving parts mean less noise, less knowledge, less likelihood of discovery,'' he said.

Hyperion hopes to begin construction on its energy center in 2009 and complete the construction four years later. The project is expected to create an average of 4,500 construction jobs over four years, with as many as 10,000 workers on site at the project's peak.

After completion, it would create 1,800 permanent jobs with wages averaging $20 to $30 per hour.

The center, which the company says would use cutting-edge technology to reduce emissions, would refine 400,000 barrels of Canadian oil per day into ultra low-sulfur gasoline and diesel fuel.

Environmental Engineer Lays Out what to Expect from Hyperion Refinery

Karen Hall, an environmental engineer with eight years experience at a Minnesota oil refinery, said South Dakota’s Union County residents should decide whether to support or oppose a proposed oil refinery based on facts, not fears.

She addressed a public meeting at the invitation of Save Union County, a group opposed to the Hyperion Resources' project for which southern Union County is a possible location.

She talked about the emissions and waste produced by an oil refinery, along with how the products, byproducts and waste materials are handled.

She said oil refineries are typically very safe places, because workers' lives depend on safety. Mishaps are rare, although equipment can fail and people can make mistakes. Hall also talked about the benefits of having a refinery in the area -- many jobs for skilled, well-paid workers.

Hall said she earned her degrees in chemistry and chemical engineering in 1991 from the South Dakota School of Mines and Technology. She worked as an environmental engineer and then as the environmental systems project manager at the Rosemount Pine Bend refinery south of St. Paul, Minn., which processed 285,000 barrels of oil per day (bpd). It was built between 1947 and 1955.

Hyperion's plans call for refining 400,000 bpd of Alberta (Canada) crude; the very heavy, hard-to-refine oil extracted from tar sands. Hall said Hyperion is "very smart" to pursue the refinery. "Canada is close and friendly," she noted. And, she said, there is not much competition for the oil because not every refinery is equipped to process it.

Hall said people are wrong to imagine a cloud of dirty air over a refinery; its emissions are largely invisible and don't have an odor. Despite the high content of sulfur in the Alberta crude, most of the sulfur will be captured and sold, she said.

Chemicals that do escape in emissions include carbon dioxide, nitrogen, lead and "volatile organics," of which ethanol is an example. She called volatile organics "bad actors in the environmental department." Sulfur and water combine to make sulfuric acid, Hall said, adding that there is not a lot of research on what that might mean to surrounding land over time.

Hall said the carbon dioxide produced is a very pure form which is captured and sold for use in a number of industries, including for carbonating soda pop. The nitrogen oxides are burned off by special equipment, she said.

She said volatile organics can leak from valves, pipes, flanges, monitors and other places in the pipeline system. As for lead, a natural component of crude oil, Hall said today's scrubbers to remove it from the air are good, but never 100 percent.

She said slag, the final leftovers from refining oil, is considered a hazardous waste and is trucked to special landfills.

Companies produce as few hazardous waste products as possible she said, because of the high cost of disposal.

Hall said Hyperion will have to meet or exceed all federal environmental requirements to get its water and air permits, a process the company plans to start early next year. She said the Army Corps of Engineers will also ride herd on the company regarding how its water use impacts wetlands. The permitting process will take one to two years.

She said the roughly 6 million gallons of water per day to be used for cooling will itself be cooled in holding ponds until it reaches the outdoor temperature before being returned to the river. However, she said, the company is allowed to emit "a certain amount of chemicals," such as ammonia, in the water.

Hall said oil refineries in general are the third largest contributor to global warming in the country, after coal-fired energy plants and the vehicles Americans drive.

Hyperion has said its new refinery will be the most environmentally friendly, "green energy center" in the country. It will be the first refinery built in the U.S. in more than 30 years and will use the most current technology available, CEO Albert Huddleston has pledged.

Some portions of existing refineries are more than 100 years old. However, Hall said, when those refineries expand, they must update their existing equipment in order to get permits.

ARGENTINA

Shell to Invest $60 Million to Improve Environmental Standards after Reopening of Argentina Refinery

The Argentine government could allow Royal Dutch Shell's sole refinery in Latin America to reopen if it approves a clean-up plan the company is expected to present in the coming days, a government official said on September 8.

The government ordered the closure of Shell's Dock Sud refinery, which refines 100,000 barrels per day and is a key provider of diesel fuel in Argentina, in September, saying it was an environmental hazard.

The Environment Secretariat said in a statement that government officials on September 10 "would meet with Shell representatives who were expected to present a clean-up plan of all the contaminated areas."

A government official told Reuters that it was likely the refinery, located in the outskirts of Buenos Aires, could start operating as early as September 11.

The government says it detected leaks, contamination in soil samples and other violations at the facility.

The closure deepened a long-running dispute between Shell and the government of President Nestor Kirchner, which has clashed with the oil major over energy prices and supplies.

Gasoline and diesel prices have been virtually frozen in Argentina for more than four years due to a tacit agreement between oil companies and the government reached during Argentina's 2001-2002 economic crisis.

In recent months, some companies have attempted to raise prices, only to reverse the decision after being publicly criticized by the government.

Kirchner has sought to keep a lid on inflation, a top government priority, as Argentina's economy has rebounded, growing a nominal 8 percent or more in the last four years.

In 2005, the Argentine leader exhorted Argentines to boycott Shell's products after it raised prices.

DOMINICAN REPUBLIC

Dominican Government Waiting for Shell to Provide Details of Refinery Stake Sale

The Dominican Government is still waiting for the Company Shell to inform on the sale process of its assets in the Dominican Petroleum Refinery (Refidomsa) and other investments in the country.

Hacienda minister Vicente Bengoa, who heads the Government commission in charge that oversees the process, said he will ask Shell’s representative in the country, Rafael Maradiaga, what’s taking place with the offers for the oil company’s stake.

It’s already been two months since the Government officially received the last information as to the selection of three pre-qualified companies, one of which Shell would choose to sell 50 percent of its shares in Refidomsa, where it’s an equal partner with the Dominican State.

In addition to 50 percent of Refidomsa’s shares, Shell owns some 70 gas stations around the country.

Bengoa said the names of the companies pre-selected by Shell for the sale of its assets aren’t known.

The newspaper Diario Libre said at least two important local business groups - associated with international energy interests- have stated an interest in Shell’s local businesses.

VENEZUELA

Lukoil, Petroleos de Venezuela Plan to Build Heavy-Oil Refinery

OAO Lukoil, Russia's second-largest oil producer, plans to build a refinery in Venezuela with the South American country's state company to process heavy oil from the Faja de Orinoco region.

Lukoil and Petroleos de Venezuela SA will probably finish talks early next year on forming a venture to develop the Junin 3 block and refine the oil into products for export, the head of Lukoil's overseas arm, Andrei Kuzyaev, said in Moscow, according to spokesman Grigory Volchek. Kuzyaev didn't identify the possible export markets.

Venezuela is counting on companies from outside the U.S. to certify reserves and replace declining production beyond Faja. President Hugo Chavez's government gave Petroleos de Venezuela controlling ownership of oil assets in the region, prompting Exxon Mobil Corp. and ConocoPhillips to abandon some projects. ConocoPhillips owns 20 percent of Lukoil.

Lukoil is asking Venezuela for guarantees that costs won't jump at the Junin 3 project. Exploration work at the field has found ``billions of barrels of heavy oil,'' the Moscow-based company's Deputy Chief Executive Officer Leonid Fedun said on Sept. 13.

ASIA

CHINA

PetroChina Plans to Spend IPO Money on Huge Refinery Project

PetroChina, China’s largest oil company, plans to use proceeds from an upcoming domestic share sale on a huge refinery project in the country's resource-rich northwest, the government said September 18.

This is one of six projects to receive funds raised in the massive Shanghai initial public offering (IPO), said the State Environmental Protection Administration, which must assess the ecological impact.

The refinery in Dushanzi in northwest China's Xinjiang region will be the country's largest refinery and petrochemical complex after expansion financed by the IPO, the administration said in a statement on its website.

It will have oil processing capacity at 10 million tons a year, and facilities to produce one million tons of ethylene products annually, it said.

PetroChina will also expand an ethylene project owned by PetroChina unit Daqing Petroleum Chemical Co, which will double its capacity to 1.2 million tons per year, the administration said.

The administration's statement, which said all six projects met the country's environment protection standards, represented the first time details of the company's IPO-funded investment program have been released.

State media reported earlier that PetroChina could raise 40 billion yuan (5.3 billion dollars) via the Shanghai share sale, expected to be completed next month at the earliest.

Kuwait, China to Speed up Multibillion Refinery, Petrochem Project

The state-run Kuwait Petroleum International (KPI) Vice President Mohammed Rashed Jasem met with local authorities in south China's Guangdong Province, where he conveyed concerns of the Kuwaiti government and Kuwait Petroleum Corp. (KPC) over the slow development of the multibillion Sino-Kuwaiti refinery and petrochemicals plant project.

In his recent talks here with Guangdong Province Development and Reform Commission (DRC) Deputy Director Li Miaojuan and Deputy Inspector Lin Xinan, Jasem sought support from the local authorities, Chinese sources told Kuwait News Agency September 25.

"Both Li and Lin assured Jasem their commitments and the special attention they are giving to the project, located in the Nansha area of provincial capital Guangzhou," the sources said.

"The Chinese side requested the Kuwaiti party to quickly finalize the feasibility study and submit the report to the central government for approval," they added.

In the separate meeting, KPI China chief Meshari Al-Mahmoud and Lin had an amicable communication on the Guangdong project issue and agreed to proceed with its engineering design, according to the provincial commission's official Website.

"The two parties discussed the progress of the Sino-Kuwaiti project work as well as the problems with the allocated site by the local government," the Chinese sources said, adding that Lin gave his full support and the backing of the DRC -- province's top economic planning agency -- to the project.

The refinery will be built to process 100 percent Kuwaiti crude supplied by KPC, with a capacity of 13 million tons per year (260,000 bpd), while the ethylene cracker unit is slated to have an annual production capacity of 1 million tons.

China's biggest oil refiner Sinopec Corp. has formed the joint venture with the KPI-led consortium that also includes Kuwait Petrochemicals Company (PIC) and Dow Chemical Co. of the US.

According to media reports last month, Sinopec President Wang Tian Pu said his company is negotiating with KPI's parent company KPC, Royal Dutch Shell Plc, and Dow Chemical, while KPC reportedly proposed the idea of having more foreign partners involved in the project such as Shell and Dow.

However, Sinopec sources said, "Although Shell was a potential partner in the Guangdong project, it seems that KPC has changed its stance about Shell and decided to drop it out from the project due to many issues."

They also cited instructions from the National Development and Reform Commission (NDRC), China's state economic planner, to drop out Shell.

UK giant BP Plc also shows an interest in the project, they said. In light of the agreement with BP signed in 2005 seeking joint investment opportunities in China and other Asian countries, KPI continues talks with BP about such potential projects.

The refinery and petrochemical complex is estimated at USD 5 billion, though its cost may further rise if the project is delayed, becoming the largest-ever Sino-foreign joint venture in China.

The Guangdong project is set to surpass the US$4 billion refining and petrochemical joint venture in the neighboring province of Fujian by Saudi Aramco, Exxon Mobil Corp., and Sinopec.

The feasibility study work of the project is expected to be completed by January 2008 followed by NDRC's official approval to start the full engineering design work that normally takes one year.

The Guangdong government anticipates the refinery and petrochemicals plant complex to be commissioned in summer 2010, but Chinese experts expressed doubts, saying, "With the difficult negotiation with the foreign parties, the plan may now face a delay, and a more realistic timetable is likely to be 2011 or after."

The key issues for the work progress that the Kuwaiti party is raising with the Guangdong government are such as the unsuitability of the site, and adverse impact on the local environment as the project is being built near populated Hong Kong.

In early September, a former executive officer of Hong Kong expressed concern over the environmental effects resulting from the Sino-Kuwaiti project during his visit to Guangdong Province.

Similar to the first Sino-foreign refinery project in Fujian, the project is facing another main hurdle which is China's regulated fuel market that would make it difficult for the foreign parties to recover their investments as such price regulations may increase their financial burdens and cause negative effects to the economic efficiency of the project.

In China, the government controls oil prices and refiners can not pass on crude costs to consumers.

"Construction of the plant would not be a problem, because the Chinese, specially Sinopec, are known to have completed many large projects before schedule, so the project will have a firm schedule once the engineering work has been completed," said the Sinopec sources.

In December 2005, Sheikh Ahmad Al-Fahad Al-Ahmad Al-Sabah, former Kuwaiti Energy Minister, and Zhong Yangsheng, Executive Vice Governor of Guangdong Province, signed MOU to build the plant as a joint venture by both nations, paving the way for KPC to participate in the long-term development of China's oil industry.

With the support of provincial governor Huang Huahua and the personal initiatives of Guangzhou Mayor Zhang Guangning, in July 2006, China's central government and the NDRC gave a preliminary approval of the refining and petrochemicals projects and designated Nansha as the site for the project.

Demand for oil products is surging in China, the world's fastest-growing major economy, with its crude oil imports soaring 14.5 percent in 2006 from the previous year, according to government statistics.

KPC continues to see the Far East as the targeted market for its product where the demand is growing steadily.

In a bid to accelerate business expansion in the region, KPC opened offices of PIC's marketing arm Equate in China, and then established its sales office in 2005 in the Chinese capital.

Recently, KPI also strengthened its presence in China with the opening of its new office in Beijing.

INDIA

Punjab's Bathinda Refinery to become Asia's Major Petro-Chemical Hub

Guru Gobind Singh Refinery Ltd. (GGSRL) at Bathinda is to be developed as one of the major Petro Chemical Hubs in Asia, realizing massive economic and vocational synergies for the region.

A consensus along this line emerged in a meeting between the Punjab Chief Minister Parkash Badal and a high ranking team of experts and officials from HPCL and Mittal Energy Pte. Ltd.

Presiding over the meeting September 1 at Punjab Bhawan, Badal said that based on a livelihood mapping of the Country, especially of North India, the project at Bathinda holds immense potential to emerge as one of the key drivers of economic growth and employment generation for the present and the next generation. He said the economic spin off of the Bathinda refinery will orbit far beyond its originally designated sphere of activity and would influence the total economy of the region.

An 18-member team from Hindustan Petroleum Corporation Ltd. (HPCL) led by its Chairman and Managing Director, Arun Balakrishanan and Sudhir Maheshwari of Mittal Energy Investments Pte. Ltd., apprised Mr Badal about the status of the prestigious project.

The core issues under the consideration of The September 1 meeting was to discuss the salient features of (GGSRL), pace of implementation and likely date of its commissioning which is slated for December 2010. The refinery is being built up on EURO IV product specification with Captive Power Plant for 110 MWs and Crude Oil pipeline from Mundra ( Gujarat) to Bathinda with single plant mooring (SPM) and Crude Oil terminal at Mundra. This 9MMTPA Refinery at Bathinda with the total investment estimated at Rs. 18000 Crore would usher an era of overall development & prosperity in the area.

Badal assured them of all support and cooperation on behalf on the State Govt. and desired that the local youth be given advantage of employment opportunities including preference for ancillary programs as envisaged by refinery in the downstream products. He hoped that the upcoming refinery in the Malwa belt would further kindle investment opportunities in the State and the Punjab Govt. was committed to offer all support to the Mittal Group for facilitating further investments in the State.

State Chief Secretary R.I.Singh reviewed the entire project in detail with the representatives of HPCL, Mittal Group & the Administrative Secretaries to work out the logistics and physical infrastructure in terms of road network ,airport facility and modelaties of land acquisition for the refinery, township and marketing terminal.

Prominent amongst others who were present in the meeting included; Media Advisor to Chief Minister Harcharan Bains, Principal Secretary to Chief Minister. D.S.Guru, Principal Secretary. Industries A.R.Talwar, MD PSIDC Anurag Verma, Special Principal Secretary to Chief Minister K.J.S.Cheema, Addl. Principal Secretary. to Chief Minister Gagandeep Singh Brar, Chairman Punjab Pollution Control Board Yogesh Goyal, Addtitional Principal Secretary to Chief Minister Anil Kumar Mahajan.

A team from HPCL comprised Joint Secretary refinery Ministry of Petroleum & Natural Gas, Prab Das, Director Finance Mr C.Ramulu, Director Industries M.A. Tankiwala, Managing Director (GGSRL) B.S. Sant, G.M. DCO, . Ajit Singh, DGM (Incharge) North Zone HPCL T.Pramanik, DGM, GGSRL Sanjeev Malhotra, Chief Regional Manager, Chandigarh ,V.K.Yadav, Area Sales Manager K.K.Handa. The Mittal Group was represented by Sudhir Maheshwari, B.P.Banka and Rajan Tandon.

Delay may Lead to ‘Minor’ Rise in IOC’s Refinery Project Cost

Delay in commissioning capacity expansion project of IndianOil’s Panipat refinery, from 12 million tonnes per annum to 15 mtpa may lead to a “minor” escalation in project cost. The Rs 803-crore project, which was already running behind schedule, has undergone fresh rescheduling in the date of completion to June 2009.

“The refinery expansion project is slightly delayed for synchronizing the shutdown period as well as the naphtha disposal mechanism. This may lead to minor escalation in project cost,” an IOC official told Business Line.

According to the official, fresh date rescheduling has been done to merge the normal maintenance shutdown period with the requisite shutdown for synchronization of expanded capacity.

The naphtha disposal mechanism of the expanded refining capacity too needs to be synchronized with the upcoming Rs 14,439-crore naphtha cracker and polymer complex at Panipat. The naphtha cracker project, originally slated for completion in December 2008, is now expected to be commissioned in 2009.

“We are preparing a modified plan for completion of the residual work of the refinery capacity expansion project. The plan, including both financial and technical details, is expected to be in place within a month,” the official said.

MALAYSIA

Gulf Petroleum of Qatar Mulls Investing $1.2 Billion to $1.5 Billion in Malaysia Refinery Project

Gulf Petroleum Corp of Qatar said September 17 that it and other members of a consortium of companies from the Middle East are looking to invest between $1.2 billion and $1.5 billion in an oil refinery project in Malaysia.

'We are in the process of evaluating our potential (local) partners and hope to conclude the process by the end of the year,'' said Abdul Aziz Ahmad, president of Gulf Petroleum Qatar.

'One of the basic issues for the refinery (project) is not only location or license, but to be able to secure the crude oil. If you are not able to do that, then that aspect of (the project) becomes a liability,'' he said.

The target market for the refinery will be Southeast Asia, he said.

Abdul Aziz said a delegation from the consortium met with Prime Minister Abdullah Ahmad Badawi to discuss their plans to invest in Malaysia, and revealed that the consortium plans to make Malaysia its hub in the region if ongoing talks end successfully.

He said the group is also looking at investing in Malaysia's property and Islamic banking sectors.

SOUTH KOREA

SK Eng Wins $170 Million PTT Refinery Upgrade Order

SK Engineering will build upgrade facilities such as condensate residue splitter and kerosene merox unit that turn benzene, toluene, and xylene residue into naphtha, diesel and jet fuel for PTT's affiliate Rayong Refinery Public Co Ltd (RCC).

The upgraded units will raise RCC's daily crude runs to 200,000 barrels from 145,000 barrels, unlisted SK Engineering said in a statement.

The construction is to finish by February 2009.

With the order, SK Engineering has racked up a total of $1.7 billion in orders from Thailand this year so far, the company said.

SK Engineering is the latest South Korean company to win construction projects in Thailand.

Over the weekend, South Korea's Samsung Engineering & Construction Co announced it had received a $1.1 billion order from PTT to build two gas plants.

The ethane and gas separation plants will be located near the expanded refinery in Map Ta Phut industrial complex.

Completion of the construction is set for March 2010 on a turnkey basis.

In August, unlisted plant builder Daewoo Engineering Co won a $130 million order from a PTT unit to construct a polyethylene plant.

GS Caltex to Build $3.2 Billion Upgrade Unit by 2010

South Korea's largest-refiner, GS Caltex, will invest up to $3.19 billion in its third upgrade unit to be built by 2010, the refiner's Chairman Hur Dong-soo told local media Sept 10.

The comments were in line with previous statements made by the refiner's top-level officials on the expansion plan and calmed some concerns that GS Caltex might shelve the project, after a spate of recent cancellations, market sources said.

Last year, GS Caltex executive vice-president S.H. Chyun said the refiner will build its third heavy oil upgrading unit (HOU) from 2009 for $3 billion.

A GS Caltex spokesman confirmed Hur's remarks.

GS Caltex has recently finished building its second 55,000 barrels per day (bpd) HOU at its 650,000-bpd Yeosu refinery, for an investment of $1.6 billion.

The upgrading units turn heavy oil into more expensive jet fuel and gas oil.

Analysts say refiners investing in units to upgrade fuel oil will be able to capitalize on stronger margins and growing demand for transport fuels such as gasoline and jet fuel.

But refinery project cancellations have accelerated in recent months as escalating costs, a shortage of engineers and uncertainty about returns raise doubts over the future profitability of new units making key transport fuels.

South Korea's third-largest refiner S-Oil Corp put on indefinite hold its $4 billion plans to build a major new refinery, and the No.4 refiner, Hyundai Oilbank Corp, also scaled back the size of a new refining unit it will build by 2011, and cut the budget on the expansion project by $400 million to $2.26 billion.

Chairman also told the Dong A Ilbo GS Caltex could spend all of a previously announced 1.5 trillion won war chest to secure energy resources on foreign firms with oil fields already in production.

GS Caltex is a joint venture between GS Holdings and U.S. oil major Chevron Corp.

S-Oil Defers new S. Korea Refinery Decision for 2 Years

South Korean Refiner S-Oil Corp will wait at least a couple of years to reconsider a plan to build a 480,000 barrels per day new refinery because of surging construction costs, its chief said September 17.

"In this construction cycle we will not be able to make money," said CEO Samir Tubayyeb in a university lecture. "Construction costs are going up more than three times."

S-Oil in June put an indefinite hold on its plans to build a $4 billion new refinery, the latest energy project to fall victim to tight contractor markets and soaring costs.

The firm had previously said the project was delayed, not cancelled, though analysts have said S-Oil might have to wait years before seeing any relief in costs.

S-Oil's plan had included building two crude distillation units, a hydrocracker and a residual fluid catalytic cracking unit, which would have nearly doubled its capacity to make it South Korea's second-largest refiner after SK Corp.

S-Oil is 35-percent owned by Saudi Arabia's state oil firm Saudi Aramco, which has been looking to invest in refineries in Asia to guarantee buyers for its crude and to tap the region's growing fuel demand.

Tubayyeb said South Korea, an exporter of oil products with excess refining capacity, did not need extra crude supplies from producers group OPEC, which has agreed to boost output from November to ease consumer worries over tight winter supplies.

THAILAND

SK Construction Sets Sights on Plant Business in Thailand

For SK Engineering & Construction, Thailand is a land of opportunity to expand its overseas footsteps as a global contractor.

Early this month, the South Korean company signed a $170 million refinery expansion deal with PTT, Thailand's top oil and gas firm. The contract from PTT's affiliate Rayang Refinery Public Company (RRC) calls for the firm to build upgrading facilities that turn benzene, toluene, and xylene residue into naphtha, diesel and jet fuel.

The units to be built by February 2009 are likely to raise RRC's daily crude processing capacity to 200,000 barrels from 145,000 barrels, according to the company.

The deal brought the total value of contracts booked by SK in Thailand to $1.7 billion.

``As the Thai government is accelerating efforts for further construction of chemical plants for economic development, we expect to win more contracts based on accumulated experiences in the field,'' an SK spokesperson said.

SK Engineering & Construction, established in 1977, is an affiliate of SK Group that also owns the country's top oil refiner SK Energy, top telecom firm SK Telecom and chemical products manufacturer SK Chemicals.

VIETNAM

Dung Quat Oil Refinery Gets New Equipment

Dung Quat oil refinery’s contractor, Technip, successfully installed the 514.4 tonne catalytic cracking reactor, the most important part of the project’s technology workshop on September 16.

By the end of August, the Paris-based Technip has basically completed equipment orders of EPC 1+4 and 2+3 tender packages.

Begun in June 2005, the Dung Quat oil refinery in Viet Nam’s central Quang Ngai Province is scheduled for completion in February 2009.

EUROPE / AFRICA / MIDDLE EAST

PORTUGAL

Galp Energeria Plans to Invest in Portugal’s Leca da Palmeria over Next Three Years

Galp Energia SGPS plans to invest more than 600 mln eur in its Leca da Palmeira refinery, in northern Portugal, over the next three years, Lusa news agency reported, citing Galp's CEO Manuel Ferreira de Oliveira.

The investment is part of a previously announced total investment plan of around 998 mln eur in several sites to maintain existing installed refining capacity of 15.2 mln tons a year.

'We are here for the long term to invest more than 600 mln eur over the next three years,' Lusa cited Ferreira de Oliveira as saying.

'A lot of people have said that we should shut down this refinery but we believe that this is an asset that we should invest in because it still is not as profitable as desired,' he added.

NIGERIA

Opec Meeting Progress made in Stabilizing Niger Delta

The new Nigerian petroleum minister and OPEC delegate Odein Ajumogobia said significant progress has been made in the oil-rich, violence-stricken Niger Delta region.

Speaking at a press conference at OPEC's headquarters in Vienna ahead of the cartel's meeting on September 11, he added the region's production levels are set to rise as the new government, elected in April 2007, was in full support of helping the country's industry.

While he admitted there were still some problems with corruption and militancy, a 'new Niger Delta master plan' was going to be implemented with the full support of president Umaru Musa Yar'Adua.

Commenting on the Forcados field's production levels, he said output was returning 'almost immediately', as they have access to parts of the field they never had before.

'We are optimistic that the new government will implement the plan and bring normalcy to the Niger Delta' he said.

Output from the Forcados fields is increasing already, he said.

He added that Nigerian capacity was over 3 million bpd, but 'we restrict ourselves to the allocations given by OPEC.'

OPEC ministers so far have repeatedly blamed refinery problems for any energy shortages the market might have suffered.

Nigeria's Ajumogobia said Africa's biggest oil producer was not immune to the problem either.

'They don't work in a sustained way,' he said. 'It takes four to five years to build a refinery so for that period we will still be importing (some) of our needs,' he said.

Nigeria’s Itsekiri Communities Demand Compensation over Oil Spill

Three Itsekiri communities Ifiekporo, Aja-Etan and Jata-Ikenren, affected by the July 3, 2007 Warri Refinery and Petrochemical Company (WRPC) oil spill fire have called on Nigeria’s Federal Government to prevail on the company to begin cleaning up the area and pay compensation to victims.

The communities, situated between the WRPC and NPDC, along the Refinery Jetty road in Warri South Local Government Area of Delta State, is also demanding immediate commencement of a N2 billion clean-up contract awarded by the then president Olusegun Obasanjo's administration, due to toxic dump sites and pollution caused by the WRPC in the past, even prior to the said spill and inferno that devastated the environment around the Ubeji community.

In separate letters to the Vice-President, Good-luck Jonathan, NNPC Group Managing Director (GMD) and Commander of the Joint Military Task Force, in the Niger-Delta region, alerted government of the lackadaisical attitude of the WRPC to their plights.

"This lukewarm posture, we must warn, is capable of triggering a complete breakdown of law and order in the state", they also called on the security outfit to advise the WRPC/NNPC management to enter into meaningful dialogue with the communities without further delay.

In the petition to Vice-President Dr. Goodluck Jonathan, the affected communities stated that the National Emergency Relief and Management Agency (NERMA) had visited them and promised to send relief materials, but these had not yet arrived three months later.

They warned of "unpleasant consequences" should their demands not be met, including remediation and compensation as well as the execution of the N2 billion original clean-up contracts."

Signatories to the three letters, dated September 20, 2007, include: Dr. Bruce Menekpo, Prince Otimeyin Enemigin, Mr. Moses Ikeren, Johnson Agbeyegbe and Wallace Tosanwumi.

SOUTH AFRICA

R110-Million Wastewater Treatment Plant Upgrade for Milnerton Refinery

The Chevron refinery, in Milnerton, South Africa has started construction of a R110-million upgrade of its wastewater treatment plant, as part of an ongoing environmental improvement program.

The refinery identified the need to upgrade its current wastewater treatment facility after receiving reports from kite surfers about the odor and visual impact of the Chevron waste- water at sea. The treated water is channeled from the refinery through a 5,5-km underground pipeline to Table Bay, about 500 m off the shoreline.

Chevron refinery health, environment and safety manager Nazeema Abrahams says regular studies by the Council for Scientific and Industrial Research have found no harm to the marine environment as a result of the wastewater outfall.

“We recognized, however, that we needed to do something about the nuisance impact that the wastewater was having on kite surfers.

Abrahams says biological treatment had been chosen as the preferred method for treating the wastewater.

“In this treatment, living bio-logical microorganisms are used to break down any contaminants in the wastewater. The type of biological treatment we selected is the moving bed bioreactor. This technology will minimize volatile organic compounds in the wastewater in line with a new Department of Water Affairs and Forestry permit, coming into effect in 2007. It will also reduce smells from the wastewater treatment plant, which is located just inside the refinery’s Koeberg road boundary fence,” Abrahams says.

She adds that the Chevron refinery has already invested more than R250-million over the past ten years to reduce environmental emissions and further reductions have been planned. An amount of R200-million has also been invested to ensure the refinery could produce more environment-friendly petrol and diesel according to new fuel specifications introduced in South Africa this year.

Refinery GM, Gordon Smith says up to 200 people will be employed during the 12-month construction period. Once completed, the plant will be operated by the refinery’s current staff.

ZAMBIA

Zambia's Major Oil Refinery Runs Out of Crude

Zambia's major oil refinery has been shut down temporarily following the running out of crude oil, it was reported on September 5.

Indeni Petroleum Refinery in Ndola, the sole refinery in the country, was closed on Sept.1 as Tanzania Zambia Mafuta (TAZAMA) could pump no more crude oil and is to be non-operational for 20 days, according to Daily Mail.

"Indeni closed on Sept. 1 because TAZAMA stopped pumping the crude oil which has run out but the ship is docking in Dar es Salaam any time soon," Energy Minister Kenneth Konga was quoted as saying.

"The country has enough stocks of fuel as oil marketing companies are importing the finished product into Zambia."

Konga said there is no need for people to panic over the matter as importers are buying fuel from Tanzania, Mozambique and South Africa.

Indeni suffers frequent shutdowns due to poor supply of crude oil from Tanzania.

AZERBAIJAN

Azerbaijan to Start Building $4 Billion Refinery in Turkey in 2008

The State Oil Company of Azerbaijan will start building a $4 billion oil refinery in Turkey in 2008, company president Rovnag Abdullayev said September 27.

The refinery, expected to have capacity of 15 million tons annually and to consist of an oil refining unit and a petrochemicals unit, will be built close to the Ceyhan port on the Mediterranean, to which oil is pumped via the Baku-Tbilisi-Ceyhan pipeline.

Abdullayev also said the Turkish government had allocated 1,000 hectares of land for the refinery, and that a feasibility study is underway.

The 1,700-kilometer (1,000-mile) Baku-Tbilisi-Ceyhan oil pipeline, expected to start operating at full export capacity (1 million bbl/d) in 2008, pumps crude from Azerbaijan's oil fields off the Caspian coast via Georgia to Turkey, and onto Western markets.

KAZAKSTAN

KazMunaiGas Cuts Vitol Oil Deal after Refinery Buy

Kazakh state firm KazMunaiGas has drastically cut crude contracts with Swiss-based oil trader Vitol on the Black Sea and re-routed some volumes to its newly acquired Romanian refinery, market sources said September 26.

"They (Vitol) have been saying they had a term deal until the year-end, but we had to re-route volumes to Constanta to supply the plant," said a KazMunaiGas source.

Traders said Vitol, which used to market all Kazakh crude from Ukraine's Black Sea port of Odessa, would be left with no more than three cargoes a month instead of its usual seven to eight 80,000-tonne cargoes of Russia's Urals crude.

KazMunaiGas [KMG.UL] last month bought 75 percent of Romanian refiner Rompetrol Group NV in a deal estimated at $2.7 billion, confirming its resolve to expand beyond Central Asia and break into European markets.

"Looks like a blow to Vitol, although the move could have been well predicted after the purchase of Rompetrol," said a trader with a Russian oil major.

Another trader said Vitol would be able to partly offset the volumes lost at Odessa by bidding more aggressively for volumes of Russian oil firm TNK-BP (TNBPI.RTS: Quote, Profile, Research), after being chosen to be among TNK's five crude lifters next year.

KazMunaiGas had previously tried to gain control of Lithuania's Mazeikiu Nafta refinery but was outbid by Polish firm PKN Orlen.

Rompetrol focuses on refining, marketing and trading and has a refining capacity of 4 million tonnes and distribution capability of 7 million tonnes annually.

It means KazMunaiGas will need to send approximately 330,000 tonnes a month to Rompetrol or around four 80,000-tonne cargoes, the most conventional deadweight in Odessa.

Russia's pipeline monopoly export schedule for September showed Odessa would load a total of 883,000 tonnes, including seven cargoes from KazMunaiGas, two from LUKOIL and two from Surgutneftegas.

A preliminary schedule for October showed Odessa would load 691,000 tonnes, including seven cargoes from KazMunaiGas and two from Surgut. KazMunaiGas is also sporadically exporting cargoes from the Black Sea port of Novorossiisk and the Baltic Sea port of Primorsk.

The firm's production is set to grow as it is ramping up output together with international majors at giant fields such as Tengiz.

Growth will be even faster when an ENI-led group puts on stream Kashagan, the world's biggest oil discovery in the past decades, which will produce over 1 million barrels per day.

"We are hearing KazMunaiGas wants to set up a proper sales desk in London," said a trader with a Western major.

"We have large plans, including in Ceyhan (Turkey). And the number of plans will only grow as we are no longer afraid of expanding in Europe," said the KazMunaiGas source.

TARTARSTAN

Shell to Provide Tatarstan Heavy Oil Upgrading Expertise in Tatneft Partnership

JSC Tatneft and Shell Exploration Co. (RF) B.V. have agreed to develop a strategic partnership to devise a program for heavy oil development in Tatarstan. They will conduct a feasibility study and assess technologies for extraction and processing (upgrading) of heavy oil, which is part of existing exploration and production licenses held by Tatneft.

This agreement opens the door to other potential joint activities, including the acquisition of new licenses for hydrocarbon exploration in Tatarstan and elsewhere in Russia.

As part of the agreement, Tatneft and Shell will consider establishing a joint venture or using other forms of cooperation.

Commenting on the agreement, Tatneft General Director Shafagat F. Takhautdinov said: "The oilmen of Tatarstan celebrated the production of three billion tonnes of oil this year. We are confident that production of the heavy oil will give a new impetus to the development of the oil-producing industry in Tatarstan and will enable us to make significant strides toward reaching a level of four billion tonnes of oil production in our Republic. Tatneft has 30 years of experience in heavy oil (bitumen) development in Tatarstan and has tested multiple technologies during this period. Cooperation with Shell, which is known for its advanced technologies for development of heavy oil worldwide, will combine experience accumulated by both companies and will become an important step in implementing this project."

Chris Finlayson, Shell's Country Chairman in Russia, said: "Shell has long been at the forefront of developing new technology to extract and process heavy oil. In a variety of places where we operate -- including the USA, Canada and Oman -- our production techniques are opening up vast energy resources. We look forward to our cooperation with one of Russia's largest oil and gas companies and hope that this partnership will build Tatneft's position as a leader in heavy oil development in Russia."

KUWAIT

Kuwait's KNPC Contracts Shell for Shuaiba Refinery

State Refiner Kuwait National Petroleum Co. (KNPC) said on September 11 it had contracted Royal Dutch Shell to improve the performance of its ageing Shuaiba refinery, which has been hit by several accidents.

The 200,000 barrels-per-day (bpd) Shuaiba refinery, one of three in the Gulf Arab state, has seen a string of incidents temporarily affecting production, including a fire in January after a gas leak and a blast in November.

Shell's Global Solutions business would review Shuaiba's administration and technical systems and would assist with maintenance for 18 months, said Hussein Ismail, the refinery's deputy managing director.

"They will take a fresh look at our systems," he told an oil conference. "They will look at our maintenance practices and compare it with international standards. We're going to apply their recommendations."

Ismail also said the refinery wanted to lower costs to prepare for oil prices coming off current high levels, but he gave no details. "We need to squeeze our expenses," he told reporters.

Kuwait has said it wants to close Shuaiba after the expected construction of the 615,000 bpd al-Zour refinery at the end of 2011, for which the world's seventh-largest oil producer is currently tendering.

The Gulf Arab state's smallest refinery said in late May it had shut down a 52,000 bpd heavy-oil unit for unscheduled maintenance lasting 3-4 weeks.

Ismail said the next planned general maintenance with a total shut down would be in 2011. Shuaiba had its last scheduled maintenance in May 2006, involving the crude distillation unit, as well as kerosene, diesel and gasoline production and some auxiliary units.

Kuwait has a crude distillation capacity of up to 930,000 bpd from its three refineries

Kuwait Approves Middle East's Biggest Refinery at 615,000 bpd

Kuwait's top energy council on September 25 approved plans to build a 615,000 barrels per day refinery, the Middle East's biggest, after months of delays due to spiraling construction costs. State news agency KUNA said the Supreme Petroleum Council, which has the last word on all energy decisions in the Gulf Arab oil exporter, had approved government plans to set up the country's fourth refinery.

It gave no further details in its brief report.

In July, state oil refiner Kuwait National Petroleum Co. (KNPC) had increased the budget for the al-Zour refinery to about $14 billion, more than twice the original cost estimate.

Rapidly rising costs in the energy industry have hit budgets and delayed refinery projects in the Middle East.

The Gulf Arab state cancelled a first tender for the refinery in February, after bids came in far above its initial budget. Local media said some bids had reached as much as $15 billion.

A new tender was launched and KNPC said in July around 30 companies had made preliminary bids.

According to media reports, French firm Technip, U.S. companies KBR, Bechtel and Foster Wheeler and Italy's Snamprogetti submitted pre-qualification bids.

KNPC plans to complete construction of the refinery by the end of 2011, a year later than the original schedule.

At 615,000 bpd, al-Zour would exceed the capacity of the Middle East's largest refinery, Saudi Arabia's 550,000 bpd Ras Tanura plant. Saudi Arabia plans to build another 400,000 bpd refinery in Ras Tanura.

Kuwait has yet to appoint a new oil minister after Sheikh Ali al-Jarrah al-Sabah resigned in June to avert a no-confidence vote against him in parliament.

Water and Electricity Minister Mohammad al-Olaim has been acting oil minister since Sheikh Ali's resignation.

Kuwait sits on around 10 percent of the world's oil reserves. It produced 2.41 million barrels per day of crude in August, according to a Reuters survey.

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