Jacobs is expanding its role to include construction management (CM) services for the Whiting Refinery Modernization Project for BP Products North America Inc. in Whiting, Ind. This expands Jacobs' current role, which includes engineering, procurement (EP), and fabrication.

Officials did not disclose the contract value.

The Whiting modernization program will equip the refinery to process more Canadian heavy crude oil and increase motor fuel production. Jacobs' portion of the program focuses on the sulfur recovery complex, which includes multiple new sulfur recovery units, tail gas units, amines units and sour water strippers in addition to significant modifications to existing units, utilities and control systems.

Jacobs is executing engineering, procurement, and construction management services out of its Baton Rouge office, and its fabrication services out of its Charleston, S.C., modular shop.

In making the announcement, Jacobs Group Vice President James Stewart stated, "We are delighted to have the opportunity to provide additional value to BP with the addition of the CM scope to our EP and fabrication services. This approach will improve the efficiency of project execution and help lower the project's overall costs."

Jacobs, with annual revenues exceeding $12 billion, is one of the world's largest and most diverse providers of technical, professional, and construction services.

Holly Corp.'s Chief Buys Sunoco’s Tulsa Refinery for $65 Mln with an Eye on Diesel

The future of U.S. refining is cloudy, with demand for oil-based fuels down and lawmakers threatening to squeeze petroleum profits with a cap-and-trade system.

But Matt Clifton, the chief executive of Holly Corp., the small Dallas-based refiner, closed a deal June 2 to buy a refinery in Tulsa and plans to pump some $150 million into it to bring it up to speed. He feels people are too downbeat about the prospects of crude oil, creating a buyer's market for assets.

"Oil is still going to play an important part in our energy requirements," he says.

To him, the timing couldn't be better to buy a refinery. Because there is hardly anyone else out there shopping, he got what he considers a great price for Sunoco Inc.'s Tulsa, OK, 85,000 barrel-per-day refinery -- $65 million, roughly the cost for the land and an oil product terminal, but not the units that transform oil into usable products such as gasoline and diesel.

The Tulsa refinery, which began production in 1913, had been a part of Sunoco's refining system since 1968.

While some bigger refiners, including Sunoco and Valero Energy Corp., are shifting gears to venture into ethanol and other biofuels, Mr. Clifton is betting that oil-based fuels will remain profitable. In particular, he's big on diesel.

"Biofuels will take longer [than most people think] to get in the market and take a longer time to impact the demand trends," he says.

In contrast, diesel is already here and demand for it is driven by developing regions, such as Asia and the Middle East, where green concerns haven't yet transformed the fuel slate.

Although the economic downturn is drying up diesel demand right now, he expects it to shoot up once the global economy recovers.

Holly's new refinery is set up to produce more diesel than gasoline, so it would benefit from higher global prices for the fuel, says Clifton. But because it is in Tulsa, it doesn't face much competition from others.

When - and if - a cap-and-trade system comes into place, says Clifton, the focus on diesel will continue to make sense. Producing diesel will be cheaper than producing gasoline because making diesel requires fewer processes, and therefore less energy, than making other refined fuels. It also generates fewer emissions than gasoline when it is burned in engines, cutting the amount of carbon emissions Holly would need to purchase.

Mr. Clifton sees the rush to renewable fuels as creating some good opportunities to snap up traditional energy assets on the cheap.

U.S. Refinery Status: Unplanned and Planned Production Outages

The following information lists unplanned and planned production outages at U.S. refineries as reported by Dow Jones Newswires. The information is compiled from both official and unofficial refining sources and does not claim to be a comprehensive list.

Most recently WRB Refining on May 31 started a lengthy period of planned maintenance at the electrostatic precipitators, or ESPs, at Fluid Catalytic Cracking Unit No. 29. The work is expected to conclude on July 12. The impact on operations is unclear but ESP work often occurs while the FCCU remains on line.

Flint Hills Resources on May 31 began the process of shutting a coking unit in the West Plant section of its Corpus Christi refinery for planned maintenance. Restart timing is unclear.

Total SA reported to environmental regulators that it restarted a unit at its Port Arthur, Texas refinery. The report only lists the unit by number, 837.

Valero Energy restarted on the fluid catalytic cracking unit at the McKee plant in Sunray, Texas, according to a filing with state environmental regulators. The unit had been shut down for planned work.

The second of the two Sunoco Inc. fluid catalytic cracking units at the Philadelphia refinery was restarted after it shut down the day before because of mechanical problems. The first one was shut down last month for economic reasons and could be restart by the end of the second week in June, a source close to refining operations said.

WRB Refining said that planned maintenance at its Borger, Texas refinery had concluded. No specifics were offered, but previous Texas State filings listed a gas oil hydro-desulfurization unit, a SCOT unit, a reformer, Units 42, 43 and 45 shut May 1 for 20 days of maintenance and month-long maintenance at FCCU No. 40 and Sulfur Recovery Unit No. 34 that started April 27.

Valero Energy restarted Butamer Unit No. 36 in Complex 6 of its Corpus Christi, Texas, refinery following maintenance. It is not clear when the unit was taken off line.

Delek US shut a SCOT unit at its Tyler, Texas refinery due to operational difficulties. The shutdown was not expected to impact operations at Sulfur Recovery Unit 2 or any other refining operations.

A lightning strike at Flint Hills Resources' Corpus Christi, Texas, refinery sparked a brief fire at the floating roof of a naphtha tank in the West Plant, burning less than 100 gallons of the product. The event did not impact refining operations. Separately, on May 22 the company notified Texas State environmental regulators of its intention to restart the FCCU shut May 19 owing to a fire.

Exxon Mobil Corp. on May 29 said that a coker drum in Coker Unit No. 6 at its Beaumont, Texas, refinery was taken off line after a crack was discovered. The impact on the Coker Unit's operations wasn't clear.

ConocoPhillips concluded planned maintenance at its Rodeo, Calif., refinery, the Company said May 29. The work began in early March and was initially expected to end within 45 days from the start-up. Trade sources said the maintenance took place at the refinery's hydrocracker and reformer units; the Co. would not confirm.

Exxon Mobil Corp.'s Torrance, Calif., refinery will perform planned maintenance in July at one of two coker units, traders doing business with the refiner said on May 29.

And a source with knowledge of operations at BP's Carson, Calif., refinery said that maintenance was underway at an unspecified unit(s) through May 29.

Royal Dutch Shell PLC (RDSA) said that its Deer Park, Texas, refinery has returned to normal operations after a snag at a crude unit.

A May 17 explosion caused a fire that has been put out at Sunoco Inc.'s Marcus Hook, Pa., oil refinery. The refinery was running at 85% of planned rates. The company ramped up production at its two other refineries to cover the production loss.

Exxon Mobil Corp. on May 18 said it had completed work on a hydrocracker unit that was shut down unexpectedly at its Baytown, Texas, refinery.

Albemarle's New FCC Catalyst Significantly Boosts Gasoline Yields

Albemarle has launched the latest addition to their leading portfolio of refining products and technologies.

"GO-ULTRA(TM)" is the first fluid catalytic cracking ("FCC") product to be offered from the company's newest manufacturing technology process known as "ONYX(TM)." GO-ULTRA is a powerful new catalyst specifically designed for application to gas oil feeds to increase naphtha yields by as much as 3% while significantly reducing coke, a critical advantage for refiners. Further, this comprehensive refining solution can deliver these results while also providing a marked improvement in bottoms cracking capabilities.

The company's new ONYX technology involves a unique manufacturing process which results in enhanced pore structure and optimized active site distribution. The innovative catalyst technology utilizes a novel matrix composition that is also being explored for potential use in other market segments. Distinctly different from Albemarle's leading JADE(TM) and TOPAZ(TM) platforms, ONYX further expands the company's respected technology portfolio.

"GO-ULTRA, our newest technology solution for the gas oil market, provides impressive benefits to refiners," said Scott A. Martin, vice president of Albemarle's FCC group. "We are excited to introduce this potent new catalyst which will deliver higher value and, in turn, increase Albemarle's presence in this important sector of the industry."

John J. Nicols, vice president of Albemarle's Catalysts group said "Our powerful new ONYX technology platform and GO-ULTRA catalyst represent our most recent value-added refining solutions and further demonstrate Albemarle's pursuit of turnkey technologies that position our clients for sustained success."

Delek Begins Sulfur Unit Work at TX Refinery

Delek US Holdings Inc took a SCOT tail gas unit offline at its 58,000 barrel per day (bpd) Tyler, Texas, refinery on June 9, according to a notice filed with state pollution regulators.

The unit, which removes sulfur compounds from gas released by the refinery's sulfur plant, will be down at least through June 14, according to the notice filed with the Texas Commission on Environmental Quality.

The refinery's sulfur recovery unit and tail gas incinerator would continue to operate during the work.

OSHA Issues Citations to Fourteen U.S. Refiners

The U.S. Occupational Safety and Health Administration said on June 10 nearly 350 citations were issued to 14 refiners in the first year of a national inspection program to improve refinery safety.

"Our inspection teams were repeatedly seeing the same problems at the refineries," said acting Assistant Secretary of Labor for OSHA Jordan Barab in a statement. "We found it necessary to remind employers of the importance of compliance with OSHA standards that are designed to save workers' lives."

In response to the OSHA statement, the American Petroleum Institute said injury rates at refineries have been steadily falling since 1998.

"According to (U.S.) Bureau of Labor Statistics data, a refinery employee is four to five times less likely to be injured on the job than employees in other manufacturing sectors," API said in the statement.

OSHA announced the national emphasis inspection program for refineries in 2007 after an investigation by the U.S. Chemical Safety Board faulted the agency's enforcement of safety rules at BP's Texas City, Texas, refinery.

A March 23, 2005, blast at the Texas City refinery killed 15 workers and injured 180 others.

API said refineries work to reduce safety risks, investigate malfunctions and maintain their refinery equipment.

OSHA said some of the refinery inspections done so far revealed plants that "failed to address their own process safety findings and recommendations, and failed to establish maintenance procedures for equipment such as pressure vessels and emergency shutdown systems."

The agency said it recently sent letters to refiners sharing data from the inspections and reminding them of refinery safety regulations.

An OSHA spokeswoman said that was first time such safety reminders were sent to U.S. refiners though it has been done with other industries.

Judge Deals Setback to Chevron Refinery Revamp Plan

Chevron Corp.'s long-planned, highly contentious project to revamp its Richmond oil refinery has been thrown into doubt, with company executives and local officials unsure what will happen after a recent court ruling.

Judge Barbara Zuniga of the Contra Costa County Superior Court has thrown out a key environmental report on the project, siding with activists who sued to stop the project after the Richmond City Council narrowly approved it last year.

In her brief ruling, Zuniga said the report was too vague on a key question: whether the project will allow the 107-year-old refinery to process heavier grades of crude oil than it currently does. The report, she said, also did not analyze a significant piece of the project - new hydrogen pipelines.

Zuniga also criticized the city for giving Chevron a needed permit before the company submitted a plan for limiting greenhouse gases after the upgrade.

The judge's ruling did not, however, say whether work on the project must stop. After winning the City Council's approval in July, Chevron started the renovations in September.

The project has long been the subject of protests and heated debate. Environmentalists and community activists call it a major expansion of a refinery that already sickens Richmond residents.

Chevron representatives call the project an upgrade, one that will modernize the aging plant. The refinery, one of California's largest, will process the same amount of oil after the renovations are finished, said company spokesman Sean Comey. But the changes will allow Chevron to make more gasoline from that oil, increasing gasoline production by roughly 7 percent.

Environmentalists who have fought the project for years want work halted immediately.

"My understanding is they're supposed to stop and dismantle any construction built so far," said Jessica Tovar, a community organizer for Communities for a Better Environment. The organization was one of four groups that sued to stop the project.

A Chevron spokesman, however, said the San Ramon company is still studying the ruling and isn't certain that construction must stop. And Richmond's city attorney said the city is awaiting clarification from the judge.

"I presume there will be a further order from the court that addresses that issue," City Attorney Randy Riddle said.

Critics say the project will allow Chevron to process heavier grades of crude oil, containing higher levels of toxins such as mercury that could increase air pollution.

Chevron insists that the refinery will still use the same types of crude oil that it does now. Once the four-year upgrade is finished, however, the refinery will be able to process larger amounts of the heavier grades of crude already used there, Comey said.

But that distinction wasn't clear in the project's environmental report, Zuniga wrote in her decision released June 5. The report "is unclear and inconsistent as to whether (the) project will or will not enable Chevron to process a heavier crude slate than it is currently processing," she wrote. As a result, the report does not adequately assess the project's effects on the environment and "fails as an informational document," she wrote.

Refinery Construction Costs Fall Nine Percent with further Decreases Anticipated

U.S. refiners struggling with slack gasoline demand, sinking profit margins and soaring inventories could see one bright spot on the horizon in the form of falling construction costs, according to a new report released on June 9.

According to IHS Cambridge Energy Research Associates, an energy consultancy, the cost of building new refining and petrochemical plants fell 9 percent between the third quarter of 2008 and the second quarter of 2009, after years of steady increases.

"The cost decline we've seen so far is due to the commodity cost coming down," said Jackie Forrest, director of IHS CERA's downstream capital cost forum. "We do anticipate further decreases."

The decline comes too late for several refinery projects such as the nearly $3 billion in planned hydrocrackers U.S. refiner Valero Energy Corp shelved early in June saying it would be cheaper to buy refineries, which are selling at deep discounts against replacement costs.

Some companies are taking advantage of lower costs already, adjusting budgets downward and rebidding contracts.

Saudi Aramco officials said that two joint-venture 400,000 barrel-per-day refinery projects would be re-bid and were expected to cost $10 billion, down $2 billon. Both projects began with $6 billion price-tags.

About two-thirds of the decline was due to the slide in the price of commodities such as steel, which fell 25 percent in the past six months, and oil, Forrest said.

"The downward pressures that began to materialize at the end of the third quarter 2008 have now taken hold on construction costs," said IHS CERA Chairman Daniel Yergin in a statement.

"At the same time, slowing demand for both energy-related and general construction projects has slackened demand causing a further loosening of construction market costs," Yergin said.

IHS CERA's report is based on the research firm's own index of global refinery and petrochemical plant construction costs.

In the last six months, IHS CERA's Downstream Capital Costs Index fell from 187 to 170. The index has a baseline of 100 in the year 2000, meaning a project that cost $100 in 2000 would cost $170 in 2009.

The current level is the first decline seen since the index began and places downstream construction costs back to 2007 levels.

Texas Suing BP’s Texas City Refinery for Pollution Violations

The Texas Attorney General’s Office is suing BP Products North America Inc. for 46 pollution violations at its Texas City, Tex., refinery, the site of a 2005 explosion that killed 15 workers and injured 170 others.

On June 4, Texas Attorney General Greg Abbott said BP did not report emissions to regulators by certain deadlines. Abbott’s office filed a hearing for an injunction requiring BP to install additional air monitors.

A June 29 hearing was scheduled in state district court in Austin, where the lawsuit was filed on May 22. It claims BP improperly released volatile organic compounds, carbon monoxide, hydrogen sulfide, and nitrogen oxides.

“BP Products is charged with polluting our environment, concealing information from authorities and harming Texans,” Abbot said. “In recent years, more than 45 unlawful pollutant emissions occurred at BP’s Texas City facility. This enforcement action holds BP accountable for failing to comply with environmental, health and safety laws that are intended to protect Texans from harm.”

In response, BP said it had no comment on the lawsuit. But BP spokesmen in the past have said the company is working to reduce the number of emissions events at the Texas City refinery.

Valero St. Charles Refinery Extinguishes Small Fire

A fire in a vacuum unit at Valero Energy Corp's 185,000-barrel-per-day (bpd) St. Charles, Louisiana, refinery was quickly extinguished, according to a spokesman with the St. Charles Parish Homeland Security and Emergency Preparedness Department.

There were no injuries reported due to the fire, the spokesman said. The fire was out about 30 minutes after being reported.

Trade sources said the fire impacted operations at the coker, the crude distillate unit and a vacuum tower,

"The fire is still under investigation," said a spokesman for the Louisiana Department of Environmental Quality.

A company spokesman was not immediately available for comment.

US Refinery Status, Planned and Unplanned

The following table lists unplanned and planned production outages at U.S. refineries as reported by Dow Jones Newswires. The information is compiled from both official and unofficial refining sources and doesn't purport to be a comprehensive list.

Most recently, Valero Energy (VLO) on June 12 shut a coker unit in the East Plant, Complex 7 section of its Corpus Christi, Texas, refinery for planned maintenance. It was unclear when the unit was expected to restart.

On June 11, Valero said that all units at its Aruba refinery would be taken out of service for economic reasons by the end of the month. The company planned to reevaluate the economics of restarting in two to three months.

And the larger of two key gasoline-making units at Sunoco's (SUN) Philadelphia refinery is expected to return to service, a person familiar with operations at the plant said. The 90,000-barrels-a-day unit in the Girard Point section of the refinery was shut unplanned on June 4.

WRB Refining LLC (ECA, COP) on June 11 planned to restart a process unit identified only as Unit 19.3 at its Borger, Texas, refinery; the process was expected to conclude June 13, but the actual time, duration and emissions will be provided in a follow-up report, the company said.

Delek US (DK) shut a SCOT unit, a unit used to increase the efficiency of sulfur recovery, at its Tyler, Texas, refinery for about four days of unplanned maintenance.

Valero Energy shut a crude, vacuum and coker unit at its Saint Charles refinery in Norco, La., following a minor fire. The outages were expected to be brief, the company said.

Tesoro (TSO) said that a power failure at its Kenai, Alaska refinery on June 4 resulted in the shut down of hydrocracking and isomerization units. Repairs were expected to conclude sometime within a week and the refinery would then return to normal operations, the company said.

Citgo shut a Shell Claus off-gas treating, or SCOT, unit at its Corpus Christi, Texas, refinery for abut six days of maintenance. Separately, FCCU No. 1, a key gasoline-making unit at the plant, was restarted Saturday following about four days of unplanned work.

Also on June 13, BP (BP) reported a brief period of flaring at FCCU No. 3 at its Texas City plant when emissions caused a relief valve to open to a safety flare stack. The status of the unit is unclear.

WRB Refining (COP, ECA) notified state regulators of its intention to restart a gas oil hydrodesulfurization unit at its Borger, Texas, refinery; it was not clear when the unit was taken off line. However, the exact timing of the restart could be any time between June 6 and June 14 the company said. The actual start date, duration and emissions would be provided in a follow-up report.

And on June 5, a wet gas compressor tripped off-line at Exxon Mobil's (XOM) Beaumont, Texas, refinery causing emissions at a coker unit. The status of the compressor, or of the coker unit, isn't clear. Separately, repairs to fix a crack in a drum at Coker Unit No. 6 have concluded, and the unit was back at planned rates the company said. The drum was taken out of service on May 21.

On June 3, Sunoco said the FCCU at its Marcus Hook refinery in Pennsylvania was restarted after shutting down unplanned on May 17 following a fire at the plant's ethylene complex.

Citgo said on June 3 that operations at its Lemont, Illinois refinery were back at planned rates following the unplanned shutdown of an FCCU. The unit was restarted June 9 and the other units affected by the outage were brought back to normal operations.

Operator Refinery Capacity Description Restart

(in 000s

bbl/day)

UNPLANNED

CANADA

EAST COAST

Sunoco Marcus 178.0 FCCU restarted June 3 Jun 3

Hook, PA following May 17 explosion

and fire at ethylene complex.

Sunoco Phila 335.0 Girard Point 90,000-b/d Jun 12

PA FCCU to restart June 11-

12; unit shut June 4 un-

planned.

Point Breeze unit restarted

May 28 and Girard Point

unit restarted May 27 after

shutting down on May 26. The

Point Breeze unit was shuttered

in April for economic reasons.

CARIBBEAN

GULF COAST

BP Texas City 467.7 Flaring reported at FCCU n/a

No. 3

Citgo Corpus 156.0 FCCU No. 1 in East Plant Jun 4

Christi, TX restarted on June 4 after

shutting down unplanned

on June 1 due to spent

catalyst problem.

Delek Tyler, TX 58.0 SCOT unit shut June 9 Jun 14

for approximately four

days of unplanned work.

Exxon Beamont, TX 315.0 Wet gas compressor shut n/a

Mobil June 5 at coker unit;

No impact on operations.

Coker drum at Coker Unit June 6

No. 6 back in service

the co. said on June 6;

it was taken out of service

on May 22 to repair a crack.

Motiva Norco, LA 220.0 Refinery resumed normal ops Jun 1

on June 1 after restarting a

catalytic reformer on May 31.

The unit's shutdown the week

before slightly reduced FCCU

ops.

Valero Norco, LA 185.0 Crude, vacuum, coker unit shut n/a

June 9 due to minor fire.

Outages expected to be brief;

no estimate on restart.

WRB Borger, TX 152.0 Unit identified only as 19.3 June 13

Refining in restart on June 11. Pro-

cess expected to conclude on

June 13.

MIDWEST

ROCKY MOUNTAINS

Citgo Lemont, IL 167.0 Refinery at planned rates Jun 2

following FCCU shutdown

on Monday. The unit was re-

started on Tuesday and other

units affected by the FCCU

outage returned to normal

throughout the day.

Sinclair Sinclair, 66.0 Refinery ops at 50% n/a

WY after March fire.

Plant has large oil

product spill May 10

WEST COAST

Alon Paramount, 53.0 Naphtha hydrotreater Early

CA shut April 23 due to an July

explosion will take 10

weeks to restart, the

co. said on May 7. The

refinery has been at re-

duced rates since Apr. 23.

PetroStar Valdez, AK 48.0 Refinery shut due to Dec. Jun/Jul

28 fire; expected to re- 2010

start in June/July 2010.

Tesoro Kenai, AK 72.0 Power failure shuts hy- June

drocracking and isomeri- 14-21

zation unit on June 4;

restart seen some time

next week.

PLANNED

CANADA

CARIBBEAN

Valero Aruba 235.0 The refinery will be shuttered Sep/Oct

for economic reasons by the end

of the month. Restart will be

reevaluated in two to three

months.

EAST COAST

Sunoco Philadelphia, 340.0 FCCU in Point Breeze section May 28

PA in restart May 28; unit was

shuttered in April for economic

reasons.

Reformer unit shut in Girard n/a

Point section in early Oct.

for economic reasons. Shutdown

to last one to six months.

Valero Delaware 210.0 Coker Unit expected to return Jun

to service by June 5-6, the 5-6

Co. said on May 29. The unit

was shut for maintenance in

Feb.

Refinery restarted end-April

after shutting down for eco-

nomic reasons while work was

performed at the coker.

FCCU will be shut in Sept. Sep

for 42-days maintenance, the

Co. said on Apr. 28. The

80,000-b/d FCCU has been at

reduced rates for economic

reasons, the Co. said on

Dec. 16.

GULF COAST

Chevron Pascagoula, 330.0 Pre-commercial heavy oil 2010

Miss. conversion project delayed

from 2008 to 2010 due to

economic factors.

Citgo Corpus 156.0 SCOT unit shut June 8 to Jun 14

Christi, Tx remove fouling and to

quench tower and exchangers.

Flint Corpus 288.1 West Plant Coking Unit in re-

Hills Christi, TX start mode on June 3; unit

shut June 1 for planned

maintenance.

$250 mil. project for new Spr

diesel desulfurization, 2010

sulfur recovery unit to begin

in Fall 2008. Construction

to last 18 months.

Marathon Garyville 245.0 Project to increase crude oil 4Q

LA refining capacity by 180,000- 2009

b/d 85% complete, the Co. said

on Apr. 30. New units expected

start up in 4th-quarter, 2009.

Motiva Port Arthur 285.0 Expansion project to increase 1st-Q

TX throughput capacity by 325,000 2012

b/d, to 610,000-b/d, slowed.

Completion now seen in 1st-

quarter 2012, from 2010.

Valero Corpus 340.0 Coker Unit shut for planned n/a

Christi, TX maintenane on June 12.

20,000-b/d FCCU in East n/a

Plant shut; West Plant

50,000-b/d FCCU at reduced

rates since mid-Dec. for

economic reasons.

Valero McKee, TX 170.0 21-days of planned mainte- May

nanace that started on May 28

1 at smaller of two crude

units, the 60,000-b/d FCCU,

and alkylation unit concluded;

the FCCU was restarted on May

28, the Co. said.

Valero Norco, LA 250.0 Upgrade project to build 2012

a new diesel hydrotreater

unit moved from 2010 to

4th-quarter 2012, the Co.

said on Jan. 27.

Valero Port Arthur 325.0 77,000-b/d FCCU at reduced n/a

TX rates since mid-Dec. for

economic reasons. Mainte-

is planned at a hydrotreater

unit, the company said on

April 17; no details were

given.

Valero Norco, LA Turnaround at coker unit 1/Q

delayed until the first 2010

quarter of 2010 from fourth

quarter 2009, the Co. said

on Apr. 28.

Valero Sunray, TX 170.0 55,000-b/d FCCU at reduced n/a

rates since mid-Dec. for

economic reasons.

Valero Three Rivers 95.0 24,000-b/d FCCU at reduced n/a

TX rates since mid-Dec. for

economic reasons.

Plant-wide 24-day turnaround Sep

to begin in Sept., the Co.

said on Apr. 28.

Western El Paso, TX 122.0 Crude unit shut May 24 week Jun 3

for 10-days maintenance.

WRB Borger, TX 152.0 Gas Oil Hydrodesulfurization Jun

unit will be restart some 6-14

time between June 6 and 14.

It is unclear when then unit

was taken out of service.

Planned maintenance at Unit Jul 12

29 FCCU electrostatic precipi-

tators starts May 31. Work

will conclude on July 12.

MID-WEST

BP Whiting 410.0 Restart pf FCCU shut in April 2nd-

IN for Spring turnaround mainte- Half

nance delayed to 2nd-half Jun

June from mid-May.

Frontier El Dorado 130.0 A coker turnaround and expan- Mid-

KS sion project was delayed until Aug.

Mid-July, and subsequently

delayed until August.

Valero Memphis, TN 195.0 FCCU upgrade originally slated 2012

for completion in 2009 has been

shifted to 2012, the Co. said

on Jan. 27.

ROCKY MOUNTAINS

Conoco Billings, 61.0 On Mar. 5 the Co. delayed for Jan.

MT one year an expansion project 2010

which will increase capacity

to 71,000 bbls. Construction of

a new crude unit is now scheduled

to begin in January 2010.

Frontier Cheyenne 52.0 The refinery is operating at n/a

WY reduced rates for economic

reasons.

WEST COAST

Alon Paramount 55.0 Hydrocracker project post-

CA poned indefinitely, the Co.

said on Feb. 4

BP Ferndale 225.0 Hyrdrocracker and reformer May 29

WA restarted May 29 from planned

maintenance that began on

Apr 15.

Chevron Richmond, 243.0 Hydrocracking Unit and re- Jun 27

CA former shut May 28 for 30-

days planned maintenance.

Exxon Torrance 155.0 Maintenance will begin in July July

Mobil at one of two 26,000-b/d coker

units, traders said on May 22.

Flint North Pole 210.0 One of three processing n/a

Hills AK units has been shut due

to low jet fuel demand,

the co. confirmed on Mar.

19.

Shell Martinez 155.0 Crude Unit and Coker Unit Aug 15

CA to shut for planned main-

tenance on July 10; re-

start seen Aug. 15.

Tesoro Golden Eagle 166.0 Hydrocracker/reformer Mid

Martinez, CA shut for planned mainte- June

nance May 9-10. Units to

return to service by mid-

June.

Tesoro Wilmington, 97.0 39-days of turnaround main-

CA tenance is planned for

fourth-quarter 2009.

Tesoro Moves to New “Green” Headquarters

Tesoro Corporation is moving into its new, green headquarters in RidgeWood Park in north San Antonio.

The 610,000 square-foot office complex is expected to earn the U.S. Green Building Council's Leadership in Energy and Environmental Design™ (LEED) Silver certification for new construction. It is only the third new project in San Antonio to be LEED certified, and it's the largest.

To achieve the certification, Tesoro's new project demonstrated a commitment to sustainability by using accepted energy and environmental principles in water efficiency, energy, atmosphere, materials and resources, indoor environmental quality, and other areas.

All of Tesoro's San Antonio employees, who have been scattered among four different office buildings, will be moved into the new offices at 19100 RidgeWood Parkway by July 12.

Shaw Wins Maintenance Contract with Marathon’s Texas Refining Division

The Shaw Group Inc. has announced the Maintenance Division of its Power Group has been awarded a maintenance, small capital construction, turnaround support and specialty services contract by Marathon Oil Corporation for its Texas Refining Division, located in Texas City, Texas.

Shaw will immediately assume current maintenance and small capital construction work supporting Marathon’s 76,000 barrels-per-day refinery. Additional turnaround, specialty and engineering services may be provided as needed. The value of Shaw’s multiyear maintenance contract, which will be included in the company's second quarter fiscal year 2009 backlog of unfilled orders, was not disclosed.

"Our new partnership builds on Shaw’s crude oil refining maintenance capabilities in a key industrial market,” said Ron McCall, president of Shaw's Maintenance Division. "Shaw has established a strong relationship with Marathon Oil Corporation, and we are confident in our ability to assist its Texas Refining Division in reducing costs while executing consistent, safe maintenance services."

Marathon Oil Corporation previously contracted with Shaw in 2008 to provide project management, engineering and procurement services for the feasibility and definition phases of benzene reduction projects at its refineries in Robinson, Ill., Garyville, La., and Catlettsburg, Ky.

CANADA

Sonic Forms Heavy Oil Upgrader JV with Mirex

SONIC has entered into a joint venture agreement ("JV") with Mirex Energy Inc. to construct and operate the first PetroSonic heavy oil upgrader in Canada. Mirex is an oil production and services company operating in the Lloydminster region and will be the operating partner in the JV. The project will initially be designed for a 1,000 barrels per day (bpd) facility to be located on the Elizabeth Metis Settlement in Alberta. The PetroSonic facility will be designed to upgrade local heavy oil supplies to meet the minimum API requirements for Canadian pipelines.

Mirex will provide facilities for the installation and initially manage the operating contracts. SONIC will grant a license for its proprietary PetroSonic upgrader technology and manage the installation and start-up. Mirex and SONIC will be equal partners exclusive of any interest in the project by the financing partners. Capital financing for the project will be provided as debt and/or equity into the project.

This will be the first PetroSonic upgrader in Canada and will allow SONIC to fully implement the process in a modular plant design which allows the process to be run in various configurations to allow for process optimization and data. The PetroSonic upgrader is a low temperature and pressure process utilizing a SONIC reactor for de-asphalting and an oxidation process to further upgrade the oil. The economics of the project improve as the price differentials between heavy oil and pipeline specification -- predominantly viscosity and density driven. Successful operation of the first installation would anticipate expansion to 3,000 bpd on a self-financed basis.

The license granted to the JV is exclusive for all Metis settlements in Canada and allows Mirex and SONIC to expand the operations of the JV to other locations or to enter into new agreements for each location. Heavy oil will be supplied in part by related parties and supplemented by independent local production. Upgraded oil will be sold into the pipeline system.

Archie Collins, Chairperson for the Elizabeth Metis Settlement, commented, "We have a very successful partnership with Mirex and this project offers local oil producers, Metis and others alike, the opportunity to build our local oil processing facilities. We have plans for related oil services which may integrate very well with the upgrading facility."

Energy Invest Ltd. are reviewing the project under their marketing and financing agreement with SONIC, either to provide part of the financing for the project or as part of a more comprehensive financial proposal they have recently presented to SONIC. Local financial participation will also be accommodated. Energy Invest have identified several projects where they would like to utilize the PetroSonic upgrader technology. Energy Invest is also a major shareholder and fully supports this first project in Canada to ease the logistics of technical support.

The project will commence with detailed engineering and permitting this summer. Preliminary engineering for the upgrader has been completed and design data from an extensive test program on Lloydminster oils is already available. SONIC and Mirex have made application under the Alberta Energy Research Institute program and the project is directly in line with recent initiatives by the Alberta Government to encourage more processing within the province. SONIC may also be eligible under other Canadian grants in place to improve efficiencies in heavy oil production.

ARUBA

Valero Plans to Shut Aruba Refinery for up to Three Months due to Poor Margins

Valero Energy Corp confirmed on June 11 it planned to shut its 235,000-barrel-per-day refinery in Aruba for two to three months due to poor margins.

The shutdown was scheduled to begin in late June and the refinery would be completely offline by early July, Valero spokesman Bill Day said.

During the shutdown, Valero plans to do maintenance on the refinery's electrical system and other work, Day said.

"We informed our employees we will begin a shutdown for economic reasons," he said.

Temporary shutdowns are not planned at other Valero refineries, Day said.

"This is similar to the shutdown we did recently at Delaware City," he said. Valero shut its 210,000 bpd refinery in Delaware City, Delaware, for the months of March and April.

Refinery employees would be retained with compensation during the shutdown, Day said.

Day also said the shutdown was not a tactic in the company's long-standing dispute over taxes with the Aruban government.

"For the most part, this is due to economic reasons, especially low distillate margins," Day said.

Near the end of the planned shutdown, Valero will review the economics of restarting operations at the refinery, he said.

When Valero purchased the refinery in 2004, it received an exemption through 2010 from taxes, but Aruba adopted a new sales tax in 2007, which Valero argues it should be exempt from also and Aruba claims the refinery must pay.

Valero has been seeking a buyer for the refinery since late 2007. A deal in early 2008 with Brazil's state-owned oil company Petrobras fell through after a fire at the refinery.

Early this year, PetroChina, Asia's top oil and natural gas producer, was said to be interested in the refinery, along with Columbia's state-run oil company EcoPetrol and Petrobras.

The refinery cannot produce finished motor fuels, but makes mid-stream products that are shipped to U.S. refineries for completion.

The inability to make finished products is considered one of the reasons Valero has been unable to sell the refinery, according to brokers of refining assets.

BRAZIL

Chevron Starts Pumping Offshore Brazil at $3 Bln Frade Project

Chevron Corp. started pumping oil and gas from an offshore field near Brazil.

The San Ramon oil giant is the operator at the $3 billion Frade project, which is 230 miles from Rio de Janeiro and about 75 miles off the coast. The oil is below 3,700 feet (more than two-thirds of a mile) of water.

Chevron picked up rights to work in the field through its $44 billion acquisition of Texaco, which had tested it in 2001 with two wells. Brazil’s Petrobras found the field in 1986 and still has a 30 percent interest in it today. Chevron has a 52 percent stake.

Getting oil out from such undersea depths is technically tricky, hence the project’s great cost. Even early estimates put it at $2.5 billion, but it’s ended up costing some $3 billion.

Water has to be pumped into the field to keep up pressure in the oil reservoir. Oil at Frade is in shallow deposits that need long, horizontal wells for extraction. Peak production at the project won’t happen until 2011, and will be about 90,000 barrels per day.

A floating production, storage and offloading vessel, or FPSO, built in Dubai is used to get the oil and gas. An FPSO is a ship with tanks for the oil as well as equipment needed to connect to drilling platforms, process their oil and offload it onto tankers or into a pipeline.

Similar Chevron projects have had big price tags — $2.7 billion for the Tahiti field in the Gulf of Mexico and at least $1 billion for its Agbami field project 70 miles off the coast of Nigeria, for example.

These huge costs are easier to justify when oil prices are high, like they were last summer. But with prices lower than $70 per barrel right now, down from near $150 a year ago, even Chevron has had to rethink some of its expenses. The company is bringing home some expensive expatriate workers from London and elsewhere as one way of reining in costs.

This is Chevron’s first working project in Brazil.

GE Gets $11 Mln VetcoGray Order from Brazil’s OGX for Subsea Wellhead Systems

GE Oil & Gas has been awarded a contract valued at more than US$11 million to supply four VetcoGray subsea wellhead systems and running tool rentals to Brazilian independent oil company OGX Petroleo e Gas Ltda.

The order, the second received by GE under a four-year frame agreement with OGX signed in December 2008, will include the first two VetcoGray MS-800 subsea wellhead systems to be delivered in Brazil.

The VetcoGray MS-800 fullbore subsea wellhead system is designed to help drillers reach deepwater targets. The system's increased casing load capacity allows drillers to run longer strings, enabling larger diameter holes to go deeper, reaching pay zones with bigger production strings. Higher pressure capacity also allows the MS-800 to withstand the higher geological formation pressures that come with deeper production.

OGX is currently operating nine exploratory blocks in the Campos and Santos Basins offshore Brazil, where several subsea exploratory wells will be drilled within the next three years. The two VetcoGray MS-800 systems, plus two VetcoGray MS-700 systems also included in the new order, will be installed in those areas.

Overall, OGX has the exploration rights in 22 offshore high-potential blocks for a four-year exploratory drilling campaign that could include up to 51 wells offshore Brazil.

"The latest order with OGX marks a major milestone for our new VetcoGray MS-800 subsea wellhead technology," said Fernando Martins, Vice President, Latin America Region for GE Oil & Gas, "These systems will provide OGX with greater flexibility in terms of casing programs for their deeper wells in Santos Basin. In addition, some of the components and tools used for MS-800 systems also can be used for the MS-700 systems, providing additional resources for OGX's drilling projects."

All of the equipment for the new order with OGX will be supplied by the Drilling & Production business of GE Oil & Gas and will be manufactured at the company's facilities in Jandira, Sao Paulo state and Macaé, Rio de Janeiro state, Brazil. The wellhead systems will be delivered to OGX by December 2009.

VENEZUELA

Japan May End $1.5 Billion Venezuela Loan after Seizures

Japan may cancel a planned $1.5 billion loan for Venezuela’s El Palito and Puerto La Cruz oil refineries after the South American nation seized Japanese company assets, said a person familiar with the situation.

The Japan Bank for International Cooperation, or JBIC, is reviewing loans for the upgrades after Venezuela took over Japanese iron and chemicals assets and fell behind on payments to oil-service contractors, according to the person, who declined to be identified because the review isn’t public. The refineries have a combined 327,000 barrels-a-day of capacity.

Venezuelan President Hugo Chavez is risking as much as $33.5 billion in Japanese investment as he takes over plants owned by companies such as Tokyo-based Mitsubishi Corp. Petroleos de Venezuela SA, the state-owned oil company, is also behind on payments to contractors including Japan’s Toyo Engineering Corp., according to the person.

“If that money were to dry out they’d be in a serious pinch,” said Roger Tissot, a consultant with Gas Energy Latin America in Vernon, British Columbia. “It doesn’t matter if you’re from China, Japan, Saudi Arabia or Wall Street, you want your money back and a little bit of return.”

Nippon Export and Investment Insurance, or Nexi, is also considering ending coverage for projects in Venezuela, the person said. The agency insures most Japanese holdings in Venezuela. The company has been holding internal meetings to determine its insurance coverage policy for Japanese investments in Venezuela, Kyoichi Suzuki, the head of the agency’s country risk analysis group, said by phone June 19.

Rafael Ramirez, Venezuela’s oil and energy minister and president of PDVSA, didn’t immediately respond to a request for comment sent to his communications office.

Hirofumi Kawagoshi, the head of investor relations at Toyo Engineering, confirmed that Venezuela has been behind in payments for a $631 million (60 billion-yen) contract to build a fertilizer plant. The accord was signed in 2007, Kawagoshi said.

Planned Japanese investments in Venezuela include $10 billion in liquefied natural gas projects, $8 billion in petrochemicals and $1.5 billion for the refineries, Chavez said while visiting Japanese Prime Minister Taro Aso in April.

“We have grave concerns about Venezuela’s nationalization of the industries and need to continue internal discussions before determining our clear future policy,” Nexi’s Suzuki said.

Japanese companies may lose their appetite for investing in the South American country without Nexi coverage because they would be fully exposed to risks, said Hidetoshi Shioda, a senior energy analyst at Mizuho Securities Co. in Tokyo.

Mitsubishi has an agreement to finance upgrading the Puerto La Cruz refinery, according to a statement from Chavez’s office. A Mitsubishi spokesman, who can’t be named because of the company’s internal rules, declined to comment on the agreement or on future talks on the refinery project.

“Trading houses and other Japanese investors would get out of Venezuela if they don’t have the Japanese government’s strong financial backing,” said Yasuhiro Narita, an analyst specializing in trading houses at Nomura Securities Co. in Tokyo.

Mitsubishi, Mitsui & Co. and Itochu Corp. are among the partners designing two liquefied natural gas plants where Ramirez said Japanese investment may reach $10 billion.

Mitsui will look into the impact of Venezuela’s possible nationalization of industries and take appropriate action in consultation with its Japanese partners, said a spokesman, who declined to be named because of company policy. An Itochu spokesman, who also can’t be identified because of internal rules, declined to comment.

In 2007, JBIC led a group including Mitsui and Marubeni Corp. that loaned PDVSA $3.5 billion to be paid in cash, crude oil or petroleum products over 15 years, according to PDVSA’s annual report.

Venezuela also gets foreign investment from China, Brazil and Russia. China Development Bank Corp. put $8 billion in a fund to invest in infrastructure projects in Venezuela and Venezuela’s legislature in June accepted $747 million in loans from the Brazilian development bank known as BNDES. Venezuela and Russia are forming a joint bank for project finance.

Venezuela has nationalized two industries with Japanese investment this year. Chavez took over the hot briquetted iron industry May 22, including Complejo Siderurgico de Guayana CA, or Comsigua, where shareholders include Kobe, Japan-based Kobe Steel Ltd. and Tokyo-based Marubeni.

The Latin American nation’s legislature passed a law June 16 to take over primary and intermediate chemicals plants, such as the Metor methanol plant where Mitsubishi Gas Chemical Co. and Mitsubishi, both of Tokyo, share a majority stake.

ASIA

CHINA

China to Build Refineries for 402,000 bpd from Sino-Myanmar Pipeline

China will build refineries capable of processing 20 million metric tons a year, or 402,000 barrels per day, in southwest China to process crude oil from the Sino-Myanmar pipeline, Jiang Ximin, an official with NDRC's energy research institute said June 25.

The refineries will be located in Chongqing City of Sichuan Province and in Yunnan Province, the official said during an energy pipeline conference.

Output of oil products from these refineries is expected to reach 12.77 million tons a year, and a related project will produce 1 million tons of ethylene per year, he said.

China National Petroleum Corp. has signed a memorandum with Myanmar on the cross-border oil pipeline. The designed annual capacity of the pipeline is 22 million tons, or 442,000 barrels a day.

CNPC earlier said that construction will start in September.

A 300,000-deadweight ton crude port and an oil tank with storage capacity of 600,000 cubic meters will be built in Myanmar, the official said.

INDIA

India’s PCDI Company Wins Contract from Larsen & Toubro

Nigdi-based Petro-Chem Development (I) Pvt Ltd has received order from L&T to supply fired heaters for Mangalore refinery.

Company directors S. G. Sangamnerkar and R. M. Page said, "These heaters are used in diesel hydrogenation and de-sulfurisation unit (DHDT), wherein diesel will be generated to satisfy latest EURO norms for pollution."

Petro-Chem Development (India) Pvt Ltd had recently received ISO 9001-2008 certification from TUV-SUD-South East Asia. Petro-Chem Development (India) is the only company from Designing and Drafting sector in India to get the certification.

The company's global customer communities are petrochemical industries in Gulf, USA, Korea and South America with a turnover of around $600 million.

INDONESIA

Kazakh State-Run Company to Buy Indonesian Pavlodar Oil Refinery

Half of Indonesia’s Pavlodar oil refinery will become state property. The KazMunayGaz national company is now holding talks on buying the shares of the oil refinery. However, it is being kept secret now how much money will be spent on buying the shares.

The Pavlodar oil refinery is now part of the MangistauMunayGaz company and the MangistauMunayGaz company's owner is the Central Asia Petroleum company of Indonesia. KazMunayGaz and China National Petroleum Corporation (CNPC) will jointly buy this Indonesian company's shares.

The talks should end before July. Although, they were part of the same company, the Pavlodar oil refinery and the MangistauMunayGaz company will be sold separately.

VIETNAM / CHINA

Taiwan CPC Plans to Set up 300,000-500,000 Tons Base Oil Plant in Vietnam or China

Taiwan government-owned refiner CPC Corp. is studying plans to build a base oil plant to produce lubricants in Vietnam or China, CPC's Lubricants Business Division Chief Executive C. Yen said June 5.

The base oil unit would have an annual capacity of 300,000 to 500,000 tons, said Yen.

CPC needs to build a base oil unit because it has to shut down its 220,000 barrel-a-day refinery and 500,000 metric-ton-a-year No.5 naphtha cracker, and a base oil unit, in Kaohsiung, southern Taiwan, by 2015, said Yen, due to a government decision.

"We need a large refinery and stable supply of feedstock for the base oil unit," Yen said.

CPC is leading a joint venture with local companies to develop the Kuo Kuang Petrochemical Park project in central Taiwan, which will replace the lost capacity, but that project may not be ready before 2015, he said.

CPC's two other refineries don't have sufficient space for the base oil plant and it may also face objections from residents, he said.

A base oil plant would use fuel oil as feedstock to produce lubricants, which are used in cars and industry.

CPC is currently prevented by Taiwan's regulations to invest in China, but "that doesn't mean that in the future we won't be able to invest," said Yen.

Yen said the company has two years to decide where to build the base oil plant, and it hopes the budget won't exceed US$307.1 million (NT$10 billion), "but that depends on what kind of facilities the refinery would have."

CPC sent a delegation last month to Vietnam's state-run Vietnam Oil and Gas Group, (PetroVietnam), and in June was set to study the refinery conditions at Quanzhou refinery in China's Fujian province.

EUROPE / AFRICA / MIDDLE EAST

EUROPE

LUKOIL Blocks Valero from Stake in Total Refinery and Considers Further Downstream Expansion into Europe

Russia's LUKOIL will buy a stake in a Dutch refinery from France's Total, gaining a foothold in northwest Europe and blocking a bid by the largest U.S refiner, Valero, to enter the region.

The June 19 deal, which expanded the No. 2 Russian oil company's refining presence in Western Europe, coincided with a state visit to the Netherlands by Russian President Dmitry Medvedev.

"Yes of course our company has further plans to expand its presence in Europe," Anatoly Moskalenko told reporters on the sidelines if the Organization for Economic Cooperation and Development's 2009 forum. From a mid-term perspective that could mean "several" refineries, he said.

The Kremlin tacitly encourages Russian companies to invest abroad as a way of increasing its foreign influence.

The move was blow to Valero's efforts to win a stake in Europe, where it has said it wished to buy refineries and take advantage of cross-Atlantic trading opportunities with its U.S. fleet of plants.

Total, which has staked out positions in some of the most prized oil projects on former Soviet territory, hailed a new era in its relationship with LUKOIL, which is 20 percent owned by ConocoPhillips.

"Russian crude oil, for which LUKOIL is one of the major suppliers, represents one of the main sources of the Vlissingen refinery," Europe's largest refiner, which retains a 55 percent stake in the plant, said in a statement.

"More broadly, this type of crude oil represents a significant portion for the supply of Total's European refineries."

In Russia, Total holds a coveted stake in state gas export monopoly Gazprom's huge Shtokman gas project in the Barents Sea. It is a LUKOIL partner in the northern Russian Kharyaga field and in Azerbaijan's Shah Deniz Caspian Sea gas field.

Irene Himona, oil analyst at Exane BNP Paribas, said the deal was intended to secure cheaper crude for the refinery.

"LUKOIL is in a position to more or less guarantee crude supplies from Russia, which tend to be cheaper, heavier crudes," she said. "It's supply optimization (by Total)."

European refiners invest heavily to process more Russian crude and benefit from its discount to lighter, sweeter North Sea oil.

Valero said in May it had agreed to buy the 45 percent stake in the 153,000 barrels-per-day Vlissingen refinery from Dow Chemical Co, although it warned shareholders it was subject to right of first refusal by Total.

Valero Chief Executive Bill Klesse had described the minority stake as an "exceptional entry point" into Europe. Valero, a powerhouse on the heavily import-dependent U.S. market for refined fuels, said it would complement trading in the Atlantic basin.

"Although we are disappointed with the result, we will continue to seek opportunities to acquire high-quality assets at attractive prices," Klesse said in a statement June 19.

Total said in a statement also on June 19 that it had exercised pre-emptive rights to buy Dow's stake in the refinery, Total Raffinaderij Nederland (TRN), and sold it on to LUKOIL.

A Total spokesman declined to say why the company had engaged in the transaction.

Dow Chemical, which has been raising cash through asset sales to help pay down debt accumulated from its purchase of Rohm & Haas, said Total's move would not affect the amount it was paid or the timing of the transaction.

LUKOIL said it expected to pay around $725 million, matching the price Valero was expected to pay Dow.

The Dutch purchase was LUKOIL's first success after years of failed attempts to acquire downstream assets in northwest Europe, a key market for the crude extracted from its fields in the Timan-Pechora province in Russia's north.

It was seen as a potential buyer for Germany's Wilhelmshaven refinery, eventually bought by ConocoPhillips; BP's Coryton, ultimately sold to Petroplus; and several plants in the Amsterdam-Rotterdam-Antwerp oil hub.

LUKOIL has invested heavily in a new Arctic terminal at the Barents Sea port of Varandei and even built a special fleet of ice-class tankers to carry its crude oil to northern Europe.

LUKOIL officials have long said they were seeking downstream assets in strategic locations with strong distribution networks.

Last year, LUKOIL bought 49 percent of Italian refiner ERG's Isab di Priolo refinery, paying 1.35 billion euro in a deal allowing it to break into the western European refining business and expanding its portfolio in the Mediterranean market.

TurboSonic Wins $2.3 Mln Order for Clean Air Technology

TurboSonic Technologies, Inc.,announced the receipt of a US$2.3 million order from a European refinery. The refinery will incorporate TurboSonic’s technology for controlling particulate emissions, as an integral part of an upgrade of its physical plant. The upgrade will facilitate the production of low-sulfur fuels in response to environmental legislation. TurboSonic expects that delivery will be completed in its 2010 fiscal year.

Edward Spink, TurboSonic CEO, noted, “We have had tremendous success with our international marketing efforts. For the third time this fiscal year, TurboSonic’s clean air technology has been selected for emissions control by a European oil refinery. We are very encouraged to see a continued demand for our “green” technologies. We have developed a highly effective customer-focused approach that leads to innovative, cost effective solutions. We believe that we will continue to grow based on this approach, the quality of our technologies, and demand resulting from an increasing environmental conscience.”

NORWAY

Alstom to Build $90 Mln CCS Demo at Norway’s Mongstad Refinery

Norway’s Mongstad oil refinery will soon begin road testing Carbon Capture and Storage technology to reduce its emissions of carbon dioxide.

The most polluting industrial site in Norway, the Mongstad oil refinery, is looking to lead the fight against climate change.

Norwegian energy company StatoilHydro has signed an engineering, procurement and construction (EPC) contract with infrastructure company Alstom on behalf of European CO2 Technology Centre Mongstad (TCM), for the construction of a demonstration 40 MWt post combustion carbon capture facility.

The contract is worth $90m (€65m). The demonstration facility will capture up to 80,000 t of carbon dioxide per year and will make use of Alstom’s proprietary chilled ammonia technology. Preliminary laboratory tests have shown that it could remove up to 90% of carbon dioxide from flue gases.

The demonstration facility is the first of its kind to be fitted to a gas-fired combined heat and power (CHP) plant and is due to be operational by November 2011. It will also treat flue gases from the Mongstad refinery.

“The main goal of testing chilled ammonia is to qualify the technology for the large-scale treatment of flue gases, while at the same time developing a cost- and energy-efficient solution,” says md of TCM, Tore Amundsen.

TCM’s other partners are Gassnova, representing the Norwegian government, and Norske Shell, and was set up to develop and test carbon capture and storage (CCS) technologies. Earlier this year TCM awarded an EPC contract to Aker Clean Carbon for an amine scrubbing demonstration plant, which will be tested alongside Alstom’s chilled ammonia CCS plant.

Soon, the refinery will begin road testing the so-called Carbon Capture and Storage (CCS) technology in order to reduce the amount of carbon dioxide emitted on a day-to-day basis.

”CO2 is a real threat but we believe it can be addressed with technology and different consumption patterns,” said Jon Arnt Jacobsen, StatoilHydro Executive Vice President for manufacturing and marketing.

At first, the refinery will host a small-scale pilot project capable of capturing 100,000 tons annually from 2011. A few years later, this will be followed by a full-scale facility that will remove most of the CO2 emitted by the refinery and a gas power plant being built there.

The Mongstad refinery emits around 1.7 million tons of carbon dioxide annually.

SWITZERLAND

Libya’s Tamoil Refinery in Switzerland Closed

The large Tamoil refinery in Collombey, canton Valais, Switzerland announced June 10 that it is closing. Police from the cantons of Valais and Vaud had raided the offices of the refinery June 9, citing repeated violations of environmental laws.

Libyan-owned Tamoil is one of Switzerland’s major providers of crude oil, importing 2.5 million tons, or 20% of Switzerland’s needs, according to federal government figures in 2008. Oil imports from Libya were halted for several weeks following the July 2008 arrest of Hannibal Qaddafi, the Libyan leader’s son, in Geneva. Relations between the two countries have been tense since then, with two Swiss engineers held in Tripoli, Libya for nearly a year, despite diplomatic efforts that include a visit by Foreign Minister Micheline Calmy-Rey in May 2009.

The refinery has been cited numerous times for allowing effluents to leak into the Rhone River, Le Temps (Fre) reports, and there has been increasing pressure for authorities to take action. Local environmental groups and the environmental protection office of Valais have called repeatedly for the authorities to take stronger measures to control what they see as serious pollution of the groundwater and the Rhone River.

The unions representing workers there were not informed by management of the decision, and they do not know how long the plant will be closed, according to TSR (Fre). NZZ (Ger) reports that neither the reasons for the closure nor its duration were given.

Sinopec to Buy Addax for $7.24 Bln

China's Sinopec Group agreed to buy Addax Petroleum Corp for about $7.24 billion (C$8.27 billion) in a bid to gain access to the Swiss oil and gas explorer's high potential oil blocks in West Africa and the Taq Taq field in Iraq.

The offer of C$52.80 per share from Sinopec International Petroleum Exploration and Production Corp, which was in a race with Korea National Oil Co (KNOC) for the bid, was about 16 percent higher than Addax's June 23 closing price.

On June 17, sources told Reuters that Sinopec Group and KNOC were competing to take over Addax Petroleum, with bids valuing the company at more than C$8 billion, including debt.

The deal involves a break-up fee of C$300 million, Addax said in a statement.

ALGERIA

Samsung Engineering Wins $1.3 Bln Algeria Refinery Deal

South Korean builder Samsung Engineering said on June 22 it had won a $1.26 billion (1.6 trillion won) refinery project in Algeria.

Samsung said in a filing to the Korea Exchange that it had received an official notification of award for a part of the Skikda Refinery Project from Algeria's Sonatrach.

SOUTH AFRICA

South African Government still Backing New Coega Refinery

South Africa’s government is concerned that it's fuels supply security is dependent on imports, with none of the local refineries having indicated expansion plans, Energy Minister Dipuo Peters said on June 22.

Therefore, the government remained in support of PetroSA's plans to build a mega crude refinery at Coega in the Eastern Cape, she said during debate on her budget vote in the National Assembly.

Construction on the refinery – known as Project Mthombo – is expected to start in 2010, and it is expected to come on stream in 2014.

Peters said future growth forecasts indicated that, without increased local refining capability, South Africa would be importing up to 20% of its total refined fuels by 2015 and doubling that by 2025.

"That is not the road to independent, self-sustaining nationhood," she said.

PetroSA's new world-class refinery would provide the lowest cost refined products sufficient enough to cater to the country's shortfall needs until 2030.

Peters said the national strategic fuel stocks policy would be revised to include holding commercial stocks as well as emergency stocks.

On fuel prices, she said she did not intend to start any form of deregulation of the liquid fuels industry in the next five years.

However, government would continuously monitor international developments in the liquid fuel sector and evaluate the pricing framework's appropriateness.

TUNISIA

Petrofac to Build 120,000 bpd Refinery in Tunisia

The British energy and engineering group, PETROFAC will build and operate the Skhira oil refinery project according to the daily Le Temps, June 24, and according to rough estimates investment costs will range as high as $1 billion.

Following the withdrawal of "Qatar Petroleum," PETROFAC which is involved in major projects in Tunisia such as the Oudhna station and the Hasdrubal gas field, has launched fresh studies for an eventual partnership with Tunisia for the building of the Skhira oil refinery which should have a capacity of 120,000 barrels per day.

In an interview to Le Temps, PETROFAC's Chief Executive Officer, Mr Amjed Bseisu, said that Tunisia's business environment, fiscal advantages and incentives and the absence of bureaucracy, are some of the assets which prompted the group to invest in the country.

ISRAEL

Zion Oil & Gas Gets Second Permit in Israel

Zion Oil & Gas Inc. has been awarded a petroleum exploration permit in Israel.

Dallas-based Zion Oil & Gas confirmed June 22 that the Israeli Petroleum Commissioner’s office was awarded a permit to explore 165,000 acres in Israel.

The company says the new permit increases Zion’s exploration area to 327,000 acres in Israel.

Zion Oil & Gas also is exploring between Haifa and Tel Aviv. The company currently has two petroleum exploration licenses in Israel.

KUWAIT

Japan and South Korea Tap Kuwait for Compensation over Canceled $15 Bln Refinery

Construction firms from Japan and South Korea have asked Kuwait for compensation for scrapping letters of intent for a $15 billion oil refinery, a Kuwaiti oil executive said on June 3.

"We have received claims for compensation from some of the companies," Faruq al-Zanki, head of national refiner Kuwait National Petroleum Co., told reporters.

"The claims have been referred to the legal department and we are currently studying them," Zanki said without disclosing the names of the companies or the sums demanded.

In May last year, Kuwait awarded four contracts worth $8.3 billion to four South Korean companies and a Japanese firm to build the refinery. Later, the oil-rich emirate signed letters of intent with the firms.

But the Kuwaiti government in March put the 615,000 barrel a day refinery project on hold following opposition from lawmakers and canceled the letters of intent.

A contract worth $4 billion to build the refinery's main units was awarded to a consortium of Japan's JGC Corp. and Korea's GS Engineering and Construction.

Hyundai Engineering and Construction secured a $1.12 billion order for offshore facilities, while Daelim Industrial and SK Engineering and Construction received contracts worth $1.184 billion and $2.06 billion respectively.

Zanki said KNPC is awaiting a decision by the Supreme Petroleum Council, the highest oil body headed by the prime minister, on whether the refinery project will be re-tendered or entirely scrapped.

In December Kuwait scrapped a $7.5 billion partnership with U.S. Dow Chemical after pressure from lawmakers, citing its high cost amid the global economic downturn.

KUWAIT / CHINA

Kuwait-China Mega Refinery Eyes Approval in Six Months

Kuwait and China are currently in the phase of reviewing candidate locations for a mega refinery and petrochemical complex project in south China's Guangdong Province, and gearing up for construction approval this year, a Kuwaiti diplomat said June 20.

The province's southwestern cities of Zhanjiang, Maoming and Taishan in the Jiangmen municipality, as well as Daya Bay of Huizhou in the southeast part are on the list," Kuwaiti Consul General in Guangzhou Nameer Al-Quraini said. He also said Kuwait Petroleum International (KPI) planned to send a delegation of experts and technicians to the four cities for field research.

The Sino-Kuwaiti mammoth plant was originally planned to be built in the Nansha district of provincial capital Guangzhou. However, amid growing concern over the environment impact on the densely populated area earlier this year, the Guangdong government suggested Zhanjiang as the new site for the project.

Given its infrastructure, transport links and environmental approvals, which are considered to be KPI's top priority, Zhanjiang would be far better positioned than the other cities to be the selected for the joint venture project, according to Al-Quraini.

With an eye to starting operations in 2013, the envisaged 300,000 barrels a day (bpd) refinery will be designed to process 100 percent Kuwaiti crude and the ethylene cracker unit is to have an annual production capacity of one million tons.

The joint venture by state-run Kuwait Petroleum Corporation (KPC), Asia's top refiner Sinopec and international oil giants aims to gain Chinese government approval for the project in 2009, Al-Quraini said. KPI, which oversees KPC's international downstream marketing operations, represents Kuwait in the talks.

Besides construction of a brand-new integrated complex, the possible plans include nearly doubling crude processing capacity at Sinopec's existing 270, 000 bpd Maoming refinery-currently China's second-biggest refinery, according to Sinopec. All the four candidate locations lie on the provincial petrochemical industry belt, which has already hosted major international joint venture projects such as Shell-CNOOC and Venezuela-PetroChina.

Estimated at $9 billion, the proposed project would become the largest Sino-foreign joint venture in China. It is also expected to serve as a driving force for the Gulf emirate towards achieving its China-bound crude oil export target of 500,000 bpd by 2015. KPC and Sinopec each hold an equal 50 percent stake in the joint venture.

To revive the stalled project, Kuwait and China struck a deal on May 11 in Beijing, which was signed by Kuwaiti Oil Minister Sheikh Ahmad Al-Abdullah Al-Ahmad Al-Sabah and Zhang Guobao, Vice Chairman of the National Development and Reform Commission (NDRC), China's top economic planning agency.

With a view of going on-stream on schedule, the agreement contained specific clauses calling for the Chinese authorities to speed up approval for the project, KPC has said earlier. The two sides also agreed to move the refinery's location from "the environmentally challenging Nansha site.

To apply for NDRC final go-ahead, environmental studies will be conducted upon determination of the location, followed by the engineering design process.

The refinery and petrochemical complex is expected to shore up Guangdong's rapidly growing economy, which expanded 10.1 percent in 2008. With a population of over 100 million, the province is also China's major consumer of gas and diesel.

In line with its long term investment strategy for large-scale downstream operations in energy-hungry Asia, Kuwait signed MoU with China in 2005 to construct the plant in the world's second-biggest energy market. In 2006, the NDRC gave the green light to KPC and Sinopec to launch preliminary studies with the Guangdong provincial government.

Kuwait exported 224,000 bpd of crude oil to China in April, a 12-fold increase from 18,000 bpd logged in 2004. The OPEC's fourth-largest producer sticks with a goal of raising its oil output capacity to four million bpd by 2020 from the current three million bpd.

SAUDI ARABIA

Saudi Aramco to Postpone FID on Dow Chemical JV until 2010

Saudi Arabian Oil Co. said June 2 that a final investment decision, or FID, on its planned refinery and petrochemicals joint venture with Dow Chemical Co. (DOW) at Ras Tanura will be made well into 2010, later than originally planned.

State-owned Aramco, the world's largest oil company by production, and Dow are presently working on early engineering for the project, known as front-end engineering design, or FEED, which will be completed in the second half next year, Abdulaziz Al Judaimi, Aramco vice president for new business development said.

"We are scheduling the FEED to finish by the third quarter of 2010," Al Judaimi said.

FEED work determines the estimated final cost of a project and its viability, in turn paving the way for the FID.

"Once we know the capital investment needed, we will have a good understanding of the viability of the project," Al Judaimi said. "The final investment decision will be made in 2010."

The decision was initially due this year but had to be pushed back after the complexity of the project required more time for the engineering work, a Dow executive told Zawya Dow Jones in March.

Dow and Aramco last year appointed Foster Wheeler Ltd. as the second project manager on the scheme to support KBR Inc. with engineering work. The complex was originally set to come on stream in 2012.

The joint venture partners in May 2007 signed an agreement to develop the project, which will integrate Aramco's existing refinery at Ras Tanura with a new petrochemicals complex on the oil-rich kingdom's Persian Gulf coast.

The project was at one point in 2007 estimated by industry sources to cost as much as $22 billion after raw material and equipment prices hit record highs.

Saudi Aramco to Award $10 Bln Refinery Deals by June

Saudi Arabian Oil Co. plans to award $10 billion worth of contracts for the construction of the planned Jubail export refinery to be implemented jointly with Total S.A., by the end of June, London-based business weekly MEED has reported.

Saudi Aramco is negotiating with seven international firms that submitted the lowest bids for six separate project packages covering construction of the refinery, located at Jubail on the Persian Gulf coast, MEED reported without saying where it got the information.

South Korean, European and U.S. companies held talks with Aramco and joint venture partner Total on the 400,000 barrel-a-day refinery project between May 25 and 29, according to MEED.

Saudi Aramco, Conoco set Deadline for Yanbu bids

Saudi Aramco and U.S. company ConocoPhillips have asked contractors to submit bids for deals to build a joint venture refinery in the kingdom by January 31, sources for the contractors said on June 22. The two companies stopped the bidding process for the

400,000 barrels per day Yanbu refinery in November, one of several projects Aramco halted as it looked to cut costs. Cost estimates for Yanbu doubled last year to $12 billion, from $6 billion when the project was announced in 2006. In June, Aramco and joint venture partner Total awarded contracts worth $9.6 billion for a similar-sized plant at Jubail.

They saved more than $2 billion by asking contractors to revise bids to factor in falling costs for raw materials and a softer contract market due to the global economic downturn. Jubail, like Yanbu, had seen cost estimates rise to $12 billion at the peak of the commodities rally last year. Aramco and Conoco prequalified contractors to bid for six main process packages and to attend a meeting on the bidding to be held in Bahrain on July 14-15, contractors said.

Tender documents would probably be issued in July or August. "We have a long bid preparation period, six months is a lot of time," a source at one company interested in bidding told Reuters. "Usually Aramco gives a period of four months but they thought that bidders may request an extension." The six packages are for crude, coking and gasoline units, a hydrocracker, tank farm and another facility to handle solids, sources said.

A few more packages would also be tendered, and some smaller packages would be awarded to local firms, sources said. The Jubail refinery was broken down into 13 packages.

More bidders have been invited to compete for Yanbu than Jubail, one source said, as Aramco and Conoco look for the most competitive prices. An average of 10 bidders would compete for each package, up from six or seven for Jubail deals, he said. "The number of bidders increased compared to Jubail," he said. "They need more competition to get the best price."

The Yanbu refinery on the Red Sea coast was due to start operations in late 2014. Both it and Jubail would process heavy crude from Moneefa oilfield, Saudi Arabia's largest-ever offshore oil project. South Korea's Samsung Engineering Co is invited to bid for three process packages that include a coker unit, a crude facility and a gasoline unit. Japan's Chiyoda Corp is interested in bidding for the coker unit, the crude facility and the hydrocraker. Italian contracting giant Saipem will be bidding for the hydrocracker, the gasoline unit, the crude facility and the coker unit.

China's Sinopec will be bidding for the coker unit, the crude facility and the gasoline unit. France's Technip will be bidding for the coker unit, the crude facility, the gasoline unit and the hydrocracker. Spain'sTecnicas Reunidas will be bidding for the coker unit and the gasoline unit. Japan's JGC will bid for the gasoline unit, the coker unit and the hydrocracker.

Among the 13 bidders that have been prequalified for the tank farm package are CB&I, Sinopec International Petroleum Service Corp, Punj Lloyd, Hyundai Heavy Industries, SK Engineering and Construction and others.

Sources at contactors said bidders for the packages include companies listed below.

COKER UNIT PACKAGE   -Samsung Engineering Co (South Korea)

                        (028050.KS)

                     -  Chiyoda Corp (Japan) (6366.T)

                     -  Saipem (Italy) (SPMI.MI)

                     -  Sinopec (China) (600028.SS)

                     -  Technip (France) (TECF.PA)

                     -  Tecnicas Reunidas (TRE.MC)

                     -  JGC Corporation (Japan)

CRUDE UNIT PACKAGE   - Samsung Engineering Co

                     - Chiyoda Corp

                     - Saipem

                     - Sinopec

                     - Technip

                     - Daelim

                     - Hyundai

GASOLINE UNIT PACKAGE   - JGC Corp

                     - Samsung Engineering Co

                     - Saipem

                     - Sinopec

                     - Technip

                     - Tecnicas Reunidas

                     - Daelim

HYDROCRACKER PACKAGE    - Chiyoda Corp

                     - Technip

                     - JGC Corp

                     - Saipem

                    - CBI Lummus (US) and Petrofac (UK)

                     - Daelim Industrial Company 00210.KS

                     - GS Engineering and Construction

                       S.Korea

TANK FARM PACKAGE       - CB&I

                     - Sinopec International Service Corp

                       (China)

                     - Punj Lloyd (PUJL.BO) (India)

                     - Hyundai Heavy Industries (S.Korea)

                      (009540.KS)

                     - SK Engineering and Construction

                     - Daewoo Engineering and Construction

                     - Larsen & Toubro (India)

                     - Petrosteel (joint venture between

                       Rotary Engineering of Singapore

                      (ROTE.SI) and Saudi Arabia Rafid Group)

SOLIDS HANDLING PACKAGE - Daelim Industrial

                     - FLSmidth Koch (Germany)

                     - GS Engineering and Construction Corp

                     - Hyundai Engineering and Construction

                       S.Korea

                     - JGC

                     - Petrofac (PFC.L)

                     - Saipem

                     - Techint (Argentina)

Tecnicas Reunidas Confirms $9.6 Bln Saudi Arabia Contract

Spanish engineering company Tecnicas Reunidas S.A. has confirmed that it won a contract to design and build the destillery and water treatment plants of a planned refinery on Saudi Arabia's Persian Gulf coast.

The contract, worth roughly EUR1.2 billion, is one of 13 that were awarded by a joint venture of Saudi Arabian Oil Co. and Total S.A. of France.

The refinery project, called Saudi Aramco Total Refining and Petrochemical Co., or Satorp, has a total budget of $9.6 billion.

The joint venture last June 18 said Tecnicas Reunidas had been selected for the contract, along with France's Technip SpA, and several South Korean companies.

The refinery will have a capacity of 400,000 barrels a day and is scheduled to be fully operational by the second half of 2013.

McIlvaine Company,

Northfield, IL 60093-2743

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