The U.S. Environmental Protection Agency (EPA) has released new information on EPA and state enforcement of hazardous waste and air regulations. In addition, the EPA posted data that allows the public, for the first time, to compare toxic releases with compliance data from facilities. This is part of EPA's ongoing commitment to increase transparency and promote the public's right to know by improving access to available data, the agency stated.

EPA made available new summary reports and data from 2004 through 2008 on EPA and state enforcement program performance with Clean Air Act (CAA) and the Resource Conservation and Recovery Act (RCRA) requirements. The reports include online graphs, trend information on enforcement and compliance in each state, and comparative reports. Data such as compliance monitoring activity, violations discovered, enforcement actions taken, and penalties assessed are available.

EPA also updated the agency's Enforcement and Compliance Online (ECHO) Website to allow users to view current information on facility compliance with water, air, and hazardous waste requirements in relation to pollutant release data from EPA's Toxics Release Inventory and National Emissions Inventory databases. This reportedly provides the public with more information on the overall environmental footprint of each facility.

In the agency's reviews of both EPA and state enforcement program performance, it identified several concerns with some programs, including uneven enforcement response, failure to identify high priority violators, and inadequate penalty assessment. The recommendations that EPA made on how to address these concerns are now available through the ECHO website.

ECHO allows users to find permit, compliance monitoring, violation, enforcement action, and penalty information over the past three years. ECHO provides communities with important enforcement and compliance information about regulated facilities. Included in the new information released today is a list of commonly asked questions about the CAA and RCRA programs, such as air quality, pollutant releases, state performance, and overall compliance rates.

The EPA stated the compliance data posted November 6 tells only one part of the story and does not relate directly to overall hazardous waste management or air quality, which have improved in the United States over the past 30 years as the result of local, state, and federal implementation of environmental programs.

More information on RCRA data: http://www.epa.gov/compliance/data/results/performance/rcra/index.html

More information on CAA data: http://www.epa.gov/compliance/data/results/performance/caa/index.html

More information on ECHO: http://www.epa-echo.gov/echo/

Senate Panel Okays Climate Change Bill in spite of Republican Boycott

The U.S. Senate Environment and Public Works Committee approved a climate bill November 5 even as Republican committee members boycotted the meeting.

Democrats voted 11-1 to pass the bill, with Sen. Max Baucus of Montana the lone "no" vote, The Hill reported.

Republicans had been boycotting the committee meetings to protest the measure's markup, saying they wanted the Environmental Protection Agency to perform a second cost analysis of the bill.

The Senate bill, co-sponsored by Sens. John Kerry, D-Mass., and Barbara Boxer, D-Calif, the environment committee chairwoman, would reduce greenhouse gas emissions by 20 percent from 2005 levels by 2020. Another provision would require companies to have permits to cover their emissions.

Boxer defended the decision to vote on the measure without Republican participation.

"The committee and Senate rules that have been in place during Republican and Democratic majorities are there to be used when the majority feels it is in the best interest of their states and of the nation to act," she said in a statement. "A majority of the committee believes that S. 1733, and the efforts that will be built upon it, will move us away from foreign oil imports that cost Americans one billion dollars a day, it will protect our children from pollution, create millions of clean-energy jobs, and stimulate billions of dollars of private investment."

David McIntosh, associate administrator for EPA's office of congressional and intergovernmental relations, told the panel a study such as the Republicans want would cost $135,000 and take 1,600 man-hours to finish, the Post reported. McIntosh said the analysis would not yield significantly different results from the one the agency already completed.

EPA Directs Chevron Subsidiary to Complete Cleanup at Texaco Site

The U.S. Environmental Protection Agency has issued a Unilateral Administrative Order to Texaco Inc. that requires the company to assess soil and groundwater contamination and evaluate additional cleanup options, for the Pacific Coast Pipeline Superfund Site (commonly known as the "Texaco site") in Fillmore, Calif.

"With this UAO, EPA looks forward to moving the Site cleanup into its final phase, so the property can be returned to productive reuse by the community," said Keith Takata, Director of the Superfund program in EPA's Pacific Southwest Region. "This cooperative effort builds on prior cleanup work and will result in a protective cleanup for the community."

From 1920 to 1951, Texaco operated the 52-acre Pacific Coast Pipeline site as an oil refinery, which contaminated soil and groundwater with heavy metals and volatile organic compounds. In 1986 Texaco cleaned up the on-site waste disposal pits, and in 1993, under the Superfund program, the EPA directed Texaco to pump and treat the groundwater.

Benzene, a known carcinogen, is the primary contaminant in the groundwater. The benzene plume, which extends approximately 100 yards off the site, does not threaten drinking water wells. Although benzene concentrations in groundwater were reduced after the pump and treat system was installed, concentrations remain above drinking water standards. The soil has low levels of lead and semi-volatile chemicals, such as naphthalene, which also need to be addressed.

The EPA is also updating the Pacific Coast Pipeline Community Involvement Plan to identify opportunities for communication with the public about upcoming activities at the site.

Marathon’s Garyville $3.9 Bln Expansion Nearly Complete

Marathon Oil Corp. reaffirmed November 3 that it will complete a major expansion of its Garyville, La., refinery by year's end as planned despite a sharp downturn in the U.S. oil refining business.

But the Houston-based company said it will shut down about half the plant for maintenance early next year, meaning the entire complex won't be up and running until the second quarter of 2010.

Projected costs of the 180,000-barrel-per-day addition also have been raised a fourth time. The project is now expected to cost $3.8 billion to $3.9 billion because of weather-related work delays last summer, company officials said.

The company had planned to shut down older units for extended maintenance in early 2010, and that the decision had nothing to do with poor market conditions for refining, Gary Heminger, executive vice president for Marathon's downstream division, said.

Marathon's Garyville expansion has moved forward despite a recession-related drop in demand for gasoline, diesel and other petroleum fuels that has prompted Marathon and rivals including Motiva, Valero Energy, ConocoPhillips to delay or cancel some refinery upgrades and additions.

Valero and Sunoco have permanently closed refineries this year, and analysts predict more facilities will be shut down.

"Any company that runs refineries should be taking a look and determining if there are any that need to be shuttered," Argus Research analyst Phil Weiss said.

Despite difficult market conditions, Marathon has no plans to close any of its refineries, which are all operating economically, Heminger said.

Marathon's Garyville plant, the nation's 18th-largest, can process 256,000 barrels per day of crude oil. With the expansion, the capacity will grow to 436,000 barrels per day, making it the nation's fourth-biggest.

In 2006, Marathon approved a $3.2 billion budget for the Garyville expansion but in October 2008 boosted the estimate to $3.4 billion amid rising labor and material costs. In August, the price tag jumped again to $3.7 billion because of a delay in receiving some materials and equipment, the company said.

Today, the expansion is 98 percent complete, and some units are in initial start-up phases, Heminger said.

Marathon reported third-quarter net income of $413 million, or 58 cents per share, down from $2.1 billion, $2.90 per share, in the July-to-September period a year ago. Revenue slid 38 percent to $14.5 billion from $23.3 billion a year ago.

Excluding one-time items, Marathon said it made 61 cents per share in the quarter, beating Wall Street expectations.

Marathon said production rose 5 percent in the third quarter to 393,000 barrels of oil equivalent per day. Through the first nine months of 2009, production was up 11 percent, chiefly due to the mid-2008 startup of its Alvheim/Vilje projects in Norway, the company said.

Mustang Completes Emissions Monitoring Study at Cherry Point

Mustang recently completed a front-end engineering study for a Continuous Emissions Monitoring Systems (CEMS) reliability project at BP's Cherry Point, WA. refinery. Mustang evaluated the automation of BP's CEMS to meet environmental agency compliance requirements and provided recommendations for improvements in environmental data management activities.

Mustang's Automation and Control business unit has extensive environmental consulting expertise in process operations and data management of air emissions from fired sources. In the study, Mustang assessed the value of programmable logic controller functions, data acquisition and retention systems, custom applications, environmental data management systems and other tools applied to increase CEMS reliability across the refinery.

Mustang also provided recommendations on network and data flow from the field instrumentation to the corporate enterprise business applications. BP's Cherry Point refinery has the capacity to process up to 225,000 barrels of crude per day and is the largest refinery in Washington State.

Key Dems See No More CO2 Bill Action This Year

Key U.S. Senate Democrats said November 10 it is unlikely there will be any more major committee action on climate-change legislation this year, the strongest indication yet that a comprehensive bill to cut greenhouse-gas emissions won't be voted on until at least next year.

Although the Senate Environment Committee recently approved a version of the bill, the proposal will face strong revisions from moderate Democrats, particularly from Senators on the Finance and Agriculture committees.

"It's common understanding that climate-change legislation will not be brought up on the Senate floor and pass the Senate this year," Senate Finance Chairman Max Baucus (D., Mont.) said on the sidelines of a caucus lunch.

Baucus said he planned to hold a number of hearings on climate legislation and eventually mark up a bill in his panel. "But I don't know that I can get a bill put together by this year, as important as climate-change legislation is," he told Dow Jones Newswires.

Baucus was the lone dissenting Democratic vote on the Environment Panel, because he wanted weaker emission-reduction targets and stronger provisions to protect energy-intensive industries and encourage clean-coal technologies.

Sen. Debbie Stabenow (D., Mich.), who is leading an effort by moderate, heartland Democrats to protect manufacturing and agriculture industries, said committees were no longer under any timetables to produce legislation.

Stabenow said the Agriculture Committee--whose jurisdiction covers climate provisions fundamental to containing costs and cutting emissions in the farming and forestry sectors--might not even debate or vote on any provisions for the bill.

"The question is whether or not Agriculture actually marks up something or it gets done on the floor," she said.

Sen. Blanche Lincoln (D., Ark.), who chairs the Agriculture Committee, is facing a tough re-election campaign next year, and handling a highly controversial climate-change bill in her panel may risk alienating voters.

In the face of an ongoing and hard-fought debate on health-care legislation--not to mention appropriations bills and finance-reform proposals--Senate Majority Leader Harry Reid (D., Nev.) has dropped his earlier schedules for committees. A Reid aide said he hadn't drafted any new timetable for panel action on climate change.

Even Sen. John Kerry (D., Mass.), a climate-bill champion who recently said committees should have climate legislation processed by the end of the year, has backed off on such expectations. "I don't want to create artificial deadlines which get in the way of our being methodical about this," he said.

Instead, Kerry said he is focused on getting the 60 votes necessary to pass controversial climate legislation - a higher margin than a simple majority and no mean feat. "The main thing to do here is to build the adequate base of support and consensus," he said.

Refiners Rally against Higher Ethanol Blend

Several U.S. oil refiners may have stepped up their investments in ethanol production this year to meet regulatory requirements, but at the same time the refining industry is waging a battle against a waiver that would allow more of the biofuel to be blended into gasoline.

The U.S. Environmental Protection Agency is considering a waiver that would allow the percentage of ethanol that could be blended into gasoline for conventional vehicles and power equipment to rise to 15% from 10%. The EPA has a Dec. 1 deadline on whether to grant this request, which was submitted in March by Growth Energy, a pro-ethanol industry group representing 54 producers that is headed by retired U.S. Army General Wesley Clark. Among the companies backing the organization are POET LLC, ICM Inc., Western Plains Energy LLC and Green Plains Renewable Energy (GPRE).

Proponents say more blending of ethanol into gasoline is good for the environment and will foster a greener economy. But a wide coalition of refiners, food producers and marine-engine manufacturers say engine technology isn't ready for more ethanol in gasoline, and food prices will increase if more of the corn-based fuel is produced. Moreover, refiners fear that higher ethanol blending would cut into gasoline consumption even more. The refining industry has been struggling with narrow margins all year due to sharply lower demand amid the economic downturn for refined products--and experts predict that gasoline consumption in industrialized countries will likely stagnate for decades to come. "All we are saying is 'Whoa, wait!', wait until the testing comes in and wait until this stuff can be used in safe quantities" in conventional engines, said Charles Drevna, president of the National Petrochemical and Refiners Association.

Both sides disagree on the science. Growth Energy, a group promoting for expanded use of ethanol through policy reform and grassroots campaigning, argues that increasing ethanol blending to 15% is safe for conventional engines and would reduce greenhouse-gas emissions equal to removing 10.5 million vehicles from U.S. roads. Plus, the move would create more than 136,000 "green" jobs and inject $24.4 billion into the U.S. economy annually, as well as help to curb dependence on foreign oil, the coalition says.

"Our expectations are that EPA will meet the statutory deadline to make a decision, and they'll accept the overwhelming scientific, economic and technical data proving an increase to E15 makes sense," said Growth Energy spokesman Chris Thorne.

Critics of the waiver say the research for using 15% ethanol in conventional engines is incomplete and that this blend of the fuel increases emissions of nitrogen oxide, a compound contributing to air pollution, Drevna said. Left to its own means, the refining industry expected to "break the E10 blend wall sometime in year 2012" to 11% to 13% ethanol blending, given higher biofuel mandates that kick in annually amid lower gasoline demand.

The renewable-fuels mandate requires the amount of biofuels blended into gasoline to rise to 36 billion gallons in 2022 from nine billion in 2008. Conventional ethanol derived from corn starch will be capped at 15 billion barrels in 2015. To meet those demands, several refining companies, including Valero Energy Corp., Sunoco Inc. and Murphy Oil Corp., snapped up ethanol-making plants from struggling ethanol producers.

During the third quarter, ethanol was a bright spot for Valero, which operated its seven newly acquired plants at near-full capacity, and for blenders such as Delek US Holdings Inc., thanks to cheap prices and a tax credit of 45 cents a gallon.

Drevna added that use of gasoline with a higher ethanol blend could create huge liabilities by voiding out warranties on vehicles and power equipment that contain coverage on fuel that includes up to 10% ethanol. Ethanol causes engines to heat up to a higher degree than gasoline alone and can corrode gaskets, which is hazardous in marine equipment since water causes ethanol to separate from gasoline, he said.

Talk about the waiver has also resurrected the old food-versus-fuel debate. Kraft Foods Inc. (KFT) spokeswoman Susan Davison said the food giant joined the opposition to raise concerns about the food-for-fuel trade off and higher food costs.

But proponents of the waiver, such as Matt Hartwig, spokesman for the Renewable Fuels Association, said the U.S. produces a surplus of corn every year and that stronger prices save the government millions of dollars in subsidy payouts.

NPRA Says Climate Change Legislation Threatens Domestic Refining Capacity

NPRA, the National Petrochemical & Refiners Association, submitted written testimony to the U.S. Senate Finance Committee November10 as it convened a hearing addressing "Climate Change Legislation: Considerations for Future Jobs."

"H.R. 2454, climate change legislation narrowly approved by the House of Representatives last June, and S. 1733, which was reported out of the Senate Environment and Public Works Committee, would have devastating impacts on American businesses across the economic spectrum, and specifically on the domestic refining and petrochemical companies that fuel our economy and their hundreds of thousands of workers and their families," NPRA wrote.

"The Energy Policy Research Foundation (EPRINC) reported this month that even before domestic refiners face rising costs from carbon emissions, they will face a higher cost structure and increased international competition that threatens 2.5 million of the current 17.5 million barrels per day of domestic gasoline and diesel fuel refining capacity with permanent closure. This is not an ivory tower prediction -- it reflects real world circumstances and is impacting our industries and employees today.

"H.R. 2454 and S. 1733 will drive domestic gasoline and diesel production offshore, resulting in lost jobs for American workers and the outsourcing of our nation's energy security to regions of the world that do not follow our already stringent environmental protections. The previously mentioned EPRINC study concluded that in addition to the 2.5 million barrels per day of capacity at risk given the current economic environment, an additional 2 - 8 million barrels per day of domestic refining capacity is threatened by the regulatory framework in H.R 2454, which mirrors S. 1733 in relation to transportation sector emissions.

The report also concludes that rather than reducing carbon emissions, this lost capacity will simply be replaced with imported fuels from refineries overseas. EPRINC states that "In a scenario where allowance costs reach $30/ton and 90% pass-through of product emission costs, total capacity losses could rise to as much as 8.0 million barrels per day and [direct/indirect refining] employment job losses could approach 400,000."

NPRA members include more than 450 companies, including virtually all U.S. refiners and petrochemical manufacturers.

Western’s Bloomfield Refinery Closure to Cut Costs

At least 100 employees at the Bloomfield refinery will be laid off by mid-December after Western Refining, Inc. announced plans November 9 to cut costs by transferring all Bloomfield operations to its Gallup facility.

The El Paso, Texas-based company said the consolidation of its Four Corners refineries will save Western Refining at least $25 million each year.

"The decision to idle the Bloomfield refinery does not come easily. Actions that negatively impact employees are always difficult," Western Refining CEO Paul Foster said. "Western appreciates the dedication of our employees and is committed to treating them fairly and with respect as we work through this transition."

Due to a shortage in affordable crude supplies in the region, Western Refining had cut collective production at the Bloomfield and Gallup refineries from 40,000 barrels daily to 25,000 barrels, according to the company.

Transferring the Bloomfield refining operations to Gallup allows Western Refining to continue producing an average 25,000 barrels of oil per day while only paying operation costs at one refinery, the CEO said.

"Gallup has the capacity to run all the crude that we're buying. We'll be able to run Gallup fully and it will be a much more efficient operation for us," Foster said.

The Bloomfield site will remain open through mid-December while the company completes refining of in-stock resources and works to prepare the refinery equipment for an indefinite shutdown, company spokesman Gary Hanson said.

Western Refining is considering alternate uses for the 285-acre facility, including possible biofuel production. No timetable for potential biofuel use was set.

"It's real, real early in the process," Hanson said. "We want to evaluate and see what options are available. There's an increased interest in biofuels and there may be some possibility we can utilize it for that kind of thing."

However, the company will continue to operate its Bloomfield products terminal, which provides gasoline supplies throughout the Four Corners region.

"We will continue to supply all of our customers in that area," the CEO said. "From a customer standpoint, they're not impacted at all."

Western Refining's struggle to maintain locally available and affordable crude oil supplies at the Bloomfield refinery is not a new concern.

The facility, formerly owned by Giant, threatened to close in 2005 due to low crude supplies, but agreed to keep the site open after the $9 million purchase of a pipeline designed to deliver crude oil supplies from southern New Mexico.

Western Refining officials had said that pipeline was shut down more than a year ago because the long-distance transfer was not profitable.

EPA Announces Final Amendments to SPCC Rule

The U.S. Environmental Protection Agency (EPA) on November 10 announced a final regulation that amends certain requirements for facilities subject to the Oil Spill Prevention, Control and Countermeasure (SPCC) rule.

The amendments clarify regulatory requirements, tailor requirements to particular industry sectors, and streamline certain requirements for a facility owner or operator subject to the rule. With these changes, the agency expects to encourage greater compliance with the SPCC regulations, thus resulting in increased protection of human health and the environment. This rulemaking marks the completion of the SPCC action, which was proposed on October 15, 2007, finalized on December 5, 2008, and for which the agency requested public comments again on February 3, 2009.

The amendments do not remove any regulatory requirement for owners or operators of facilities in operation before August 16, 2002, to develop, implement and maintain an SPCC plan in accordance with the SPCC regulations then in effect. Such facilities continue to be required to maintain their plans during the interim until the applicable date for revising and implementing their plans under the new amendments.

Valero to Close Down Delaware City Refinery

Valero Energy Corp. announced November 20 it intends to permanently shut down its Delaware City refinery due to financial losses caused by very poor economic conditions, significant capital spending requirements and high operating costs. The shutdown will affect approximately 550 employees at the plant.

A safe and orderly shutdown of the refinery will commence immediately. Valero remains committed to its marketing businesses in the Northeast and will continue to reliably supply its customers, partially through higher throughput rates at the company’s other refineries.

"The decision to permanently close the Delaware City refinery was a very difficult one," said Valero Chairman and CEO Bill Klesse. "We have spent the last year diligently trying to avoid this situation, and I have worked closely with Gov. Markell in an effort to find a different outcome. Earlier this fall, we shut down the gasifier and coking operations in an attempt to improve reliability and financial performance, but the refinery’s profitability did not improve enough. Additionally, we have sought a buyer for the refinery, but feasible opportunities have not materialized. At this point, we have exhausted all viable options.

"We realize that the decision to close the refinery affects many employees, their families, and the community. We are thankful to our employees for their service, and we will treat them fairly during this difficult period."

In the fourth quarter of 2009, the company expects to report a pre-tax charge of approximately $1.7 billion to $1.8 billion, or $2.00 to $2.15 per share after taxes, related primarily to asset impairment, employee severance and other shutdown costs. The company estimates the cash portion of the pre-tax charge will be in the range of $125 million to $150 million. The current and historical financial results of the affected operations will be shown as discontinued operations in the company’s financial statements.

The company estimates the shutdown will reduce pre-tax operating expenses by approximately $450 million, including $125 million of non-cash costs, in 2010 and will reduce capital spending and turnaround costs by approximately $200 million through 2010. In addition, the company expects to receive after-tax cash flows in 2010 in the range of $600 million to $700 million from inventory sales assuming current prices and other cash benefits from discontinued operations.

"As a result of this business decision, we expect the substantial cost savings and cash benefits will improve the company’s financial position and cash flow for 2010," Klesse said. "Our action is consistent with previous actions we have taken to improve our profitability and lower our break-even costs to become more competitive."

U.S. / MEXICO / INDIA

Graham Corp Wins $3.9 Mln Steam Surface Condenser Orders

Graham Corp., a manufacturer of critical equipment for energy, petrochemical and other process industries, on November 4 announced that it has been awarded three orders valued at $3.9 million for custom-engineered steam surface condensers.

One condenser will be installed at a petrochemical facility in India, the second condenser is destined for a Mexican oil refinery and the third condenser is for a biomass-fueled cogeneration facility in the United States. All three condensers are expected to be engineered and manufactured in the Company's Batavia, New York, facility. The orders were received at the end of October and are included in the $5.8 million in total orders received in that month.

Shipments of the condensers are expected to begin in the Company's fiscal 2011 second quarter, with the majority of the revenue recognized during the third and fourth quarters of that fiscal year. Graham's fiscal year 2011 begins on April 1, 2010.

James R. Lines, Graham's President and Chief Executive Officer, commented, "Our commitment to the expanding energy markets and strong presence in the petrochemical industries continues to provide demand for our products, as we believe is evidenced by these recent new orders. We believe the emerging economies in Asia, the Middle East and South America will experience considerable investment over the next two decades in new energy and petrochemical producing facilities. Importantly, our brand is strong in these markets and regions of the world. Moreover, the biomass facility order validates Graham's involvement in the growing alternative energy markets in the U.S."

"The October order activity is indicative of the improvement we are seeing in both the quality and number of pipeline opportunities and may be an indication that major project work is beginning to advance. However, we continue to anticipate a non-uniform level of order activity in the coming months, and do not feel the markets have fully recovered at this point. We will continue our aggressive, but disciplined, pursuit of business during this period of uncertainty."

CANADA

Aecon Wins Two Contracts for $125 Mln to Modify Regina Refinery

Aecon Group Inc. announced November 6 that Aecon Field Services, a division of Aecon Lockerbie Industrial has been awarded two contracts totaling $125 million by Consumers' Co-operative Refineries Ltd. for work required to modify existing process units at their Regina Refinery.

The project includes mechanical work, fabrication, and installation of pipe and other equipment at the refinery. Work is scheduled to begin in the fourth quarter of 2009 and is scheduled for completion in the summer of 2011.

"This project award is strategically very important to us, as it represents a breakthrough into the Saskatchewan industrial market," said Paul Koenderman, Executive Vice President, Aecon Industrial Group. "We look forward to working with Consumers' on this significant project."

Aecon Group Inc. is Canada's largest, publicly traded construction and infrastructure development company. Aecon and its subsidiaries provide services to private and public sector clients throughout Canada and on a selected basis internationally.

Suncor Awards Jacobs Engineering U2 Turnaround Contract

Jacobs Engineering Group Inc. announced November 3 it has been awarded a contract by Suncor Energy (Suncor) to provide planning, pre-work, procurement and field services for execution of a portion of the 2010 Turnaround at its Upgrader 2 (U2) unit located 30 kilometers north of Fort McMurray, Alberta, Canada.

Officials did not disclose the contract value.

The work will be developed in two phases. The Planning and Preparation Phase is currently under way and will be followed by the Execution Phase. The outage is scheduled to begin in the second quarter of 2010. Jacobs has experience in planning, scheduling and executing over 30 successful turnarounds in North America, on average a year.

In addition to supporting Suncor oil sands with the U2 2010 Turnaround, Jacobs is assisting Suncor's Major Projects group responsible for design and construction of a number of developments in support of Suncor's Tailings Reduction Operations group.

In making this announcement, Jacobs Group Vice President Chip Mitchell stated, "We are very proud of our longstanding relationship with Suncor and are thrilled to re-engage our field services team at oil sands. We will continue to work closely with Suncor to improve plant reliability and drive operational excellence."

Keyera Ups Stake to $27 Mln in West Pembina Gas Plant Acquisitions

Keyera Facilities Income Fund announced November 10 that it has agreed to acquire an additional 33% ownership interest in the West Pembina gas plant, increasing Keyera's ownership to approximately 69%. In addition to the plant interests, Keyera is also acquiring other ancillary assets associated with the West Pembina plant, including a sour gas gathering pipeline, as well as sulfur and water handling and disposal facilities. As part of the agreement, Keyera has also entered into long-term processing agreements at the facility with the vendors.

The total combined cost of the acquisitions is approximately $27 million. One of the two transactions closed November 10, 2009 and the other is expected to close in December 2009 (subject to normal closing conditions). Both transactions are subject to rights of first refusal on a small portion of the acquired assets.

"We are very pleased to increase our ownership in the West Pembina gas plant. These acquisitions support our strategy of increasing ownership in existing facilities and enhancing our presence in the geologically prospective Foothills region of Alberta" said Jim Bertram, President and CEO of Keyera Facilities Income Fund. "West Pembina is located in an area of significant geological potential, and one that has seen an increase in the use of horizontal drilling and multi stage fracturing techniques to target tight gas reservoirs. The West Pembina plant is interconnected with other Keyera facilities in the area and provides producers with broad access to gathering systems and increased processing flexibility."

BRAZIL

Brazil’s Lula Kicks off Refinery Revamp

Brazilian President Luiz Inacio Lula da Silva on November 19 participated in the ceremony marking the beginning of the infrastructure construction work for the revamp of the Potiguar Clara Camarao Refinery (RPCC) and the deployment of the gasoline production unit at the Guamare Pole, in Rio Grande do Norte state. The Term of Commitment to begin the work was signed by Petrobras' CEO, Jose Sergio Gabrielli de Azevedo, by the Company's Downstream director, Paulo Roberto Costa, and by the governor of the state, Wilma de Faria.

During the ceremony, President Lula said the pre-salt was not discovered by chance. "Had we not invested in research and development, we would not have discovered the pre-salt. Without investments, we would not have developed biodiesel," exemplified the president to an audience of more than 300 refinery employees. "In the past, they said we could not build vessels, drilling rigs and equipment in Brazil. We now see that was not true. Petrobras is placing its orders here," stated Lula.

Petrobras' president, Jose Sergio Gabrielli de Azevedo, highlighted the importance of the refinery for the state of Rio Grande do Norte. "The role of this refinery is to ensure the state self-sufficiency in oil products. We will produce gasoline, QAV, LPG, and diesel to supply the entire state," said Gabrielli, who also remarked the construction work will improve the refinery's logistics capacity.

Procurement from vendors surged from R$50 million to R$450 million

Gabrielli, remarked that ten years ago, the total orders made to vendors in the state totaled no more than R$50 million per year. "Now orders add up to R$450 million, and this generates income and jobs for the local population." Petrobras' CEO also mentioned that in addition to the refinery, Petrobras has two other units that test biofuel made out of castor beans and other oleaginous plants. "We are completing the testing phase and will soon attain outstanding results," revealed Gabrielli.

Mines and Energy minister, Edison Lobao, said that the pre-salt wealth will soon benefit the entire Brazilian population, by means of the Social Fund and through the production sharing system, projects that are proceduring in Congress. The governor of Rio Grande do Norte, Wilma de Faria, emphasized Petrobras currently generates 12,000 direct and 40,000 indirect jobs in the state. National Integration minister, Geddel Vieira Lima, and Petrobras' Downstream director, Paulo Roberto Costa, and Exploration and Production director Guilherme Estrella, in addition to local authorities, also attended the event.

Petrobras to Spend $215 Mln on Refinery Expansion

Brazilian oil giant Petrobras is investing $215 million in expanding operations at its Rio Grande do Norte refinery, the company said in a statement November 18.

The refinery, also known as Refinaria Potiguar Clara Camarao, or RPCC, is located in the extreme northeast of Brazil, where Petrobras produces oil and gas.

RPCC is a relatively small refinery and processes just 30,000 barrels a day of crude oil.

The expansion will add gasoline and petrochemical naphtha to existing liquefied petroleum gas or LPG, diesel and aviation fuel units.

The plan is to produce on a daily basis 21,000 cubic meters of gasoline, 45,000 cubic meters of diesel, 7,500 cubic meters of aviation fuel, 11,700 cubic meters of LPG and 3,000 cubic meters of naphtha.

The investment will also expand port capacity by adding loading facilities capable of handling ships of up to 50,000 metric tons.

Petrobras' total refining capacity in Brazil is currently 1.9 million barrels a day, but the company plans to add an extra 1.2 million barrels a day capacity by 2015.

Venezuela, Brazil Sign Accord on Abreu e Lima Refinery

Brazil’s state-run Petroleo Brazileiro SA (Petrobras) and Venezuela’s Petroleos de Venezuela SA (PDVSA) completed negotiations for joint construction and operation of the Abreu e Lima refinery, in Brazil's Pernambuco state.

The two firms said the Abreu e Lima refinery will be able to process 230,000 b/d of heavy oil, supplied equally by Petrobras and PDVSA. The refinery’s main product will be low-sulfur diesel.

Petrobras and PDVSA will incorporate the company in Brazil. They did not say when the procedures would be completed or when the refinery would begin operating.

The refinery was conceived to process crude from a PDVSA-Petrobras joint venture in the Carabobo region of Venezuela's Orinoco belt, but it has taken years for the two sides to agree on the terms of their partnership.

Last month, Petrobras said it had resolved all outstanding issues with PDVSA over development of the Abreu e Lima refinery, but that the Venezuelan firm would have to pay Petrobras at least $400 million when it signs the final agreement.

Petrobras will hold a 60% stake in the joint-venture firm, while PDVSA will hold the remaining 40%.

COLOMBIA

CB&I Awarded $1.4 Bln REFICAR Refinery Project in Colombia

CB&I has been awarded a project valued in excess of US$1.4 billion by Refinería de Cartagena S.A. (REFICAR) for the engineering, procurement services and construction of a new refinery, with processing capacity of 165,000 barrels per day, adjacent to REFICAR’s refinery in Cartagena, Colombia. CB&I’s scope also includes revamping the existing 80,000 barrel per day refinery. The overall project will relieve regional refining constraints and will enable REFICAR to produce clean, ultra-low sulfur gasoline and diesel from heavy crude.

“We are tremendously proud to have been awarded this new, world class, multi-process unit refinery in Colombia,” said Philip K. Asherman, President and CEO. “REFICAR, an Ecopetrol company, has chosen CB&I to be the single contractor to engineer, procure, and construct this important project, which is key to enhancing Ecopetrol’s position as a leading producer for the entire region. CB&I brings more than 40 years of experience in Colombia; our legacy as one of the safest contractors in the world; our ability to train and mobilize the local workforce; and our track record for a strong commitment to the environment. This project combines CB&I’s full spectrum of capabilities, including our EPC experience, our proprietary licensed technologies and our steel plate structure expertise, under the leadership of our CB&I Lummus business sector.”

CB&I will provide project management and the engineering, procurement services, fabrication and construction for the new refinery, including the following major components:

Crude and Vacuum Distillation

Fluid Catalytic Cracker Naphtha Hydrotreater

Diesel Hydrotreater

Hydrocracker

Hydrogen Plant

Sulfur Plant

Delayed Coker

HF Alkylation, C4 Isomerization

Power Generation

Offsites and Utilities

Following the completion of Front End Engineering and Design, this next phase of the overall project includes detailed engineering, procurement of equipment and materials, and initiation of construction activities. CB&I will execute the engineering and procurement out of its Houston office, with resource support from its other global technical centers. The project is scheduled for completion in 2012.

TRINIDAD & TOBAGO

Petrotrin Awards Samsung $220 Mln ULSD Plant Contract

Samsung Engineering has won a refinery unit project in Central and South America.

Samsung Engineering announced that it has won a $220 million USD Ultra Low Sulfur Diesel Unit plant project order from PETROTRIN, (Petroleum Company of Trinidad & Tobago) a national oil company.

The plant will be constructed in Pointe-a-pierre refinery complex which is located 38 km south to Port-of Spain, the capital of Trinidad & Tobago. This facility will be producing 40,000 barrel of ultra low sulfur diesel per day and the sulfur content will be under 8ppm complying with EURO-V standards. This project will be executed as a Lump-Sum Turn Key basis that includes all engineering, procurement, construction and commissioning and its expected completion is in March 2012.

In 2006, Samsung entered the Caribbean market with NHT/CCR plant awarded from Petrotrin, which is expected to complete this year end. Through this repeated order, Samsung Engineering can utilize its current resource efficiently including construction equipments, materials and man power.

Trinidad & Tobago is rich in natural resources including oil and gas. Samsung Engineering is planning to enlarge its coverage of new orders and business portfolios in Central and South America with its diverse project experiences in Mexico and Venezuela and this ULSD project.

ASIA

CHINA

Saudi Aramco Resumes Talks for Purchasing 200,000 bpd Sinopec Refinery Stake

Saudi Aramco has recently resumed negotiations with China Petroleum and Chemical Corp., (Sinopec), over investing in one of the latter's refineries located in the coastal city of Qingdao, according to the China Ministry of Commerce on November 12.

The Sinopec Qingdao refinery has a refining capacity of 200,000 barrels per day (bpd).

Negotiations between the two parties actually began before the Qingdao refinery even entered into production last May. However, the negotiations stalled midway, supposedly because Saudi Aramco worried that the Chinese government's product oil price controls would harm the refinery's profits.

But since China adopted the new product oil policy this past January, Saudi Aramco's interest in purchasing the equities has been aroused once more.

Saudi Aramco's first refinery project in China recently entered into commercial operation. The project, located in Quanzhou city of the southeast coastal province of Fujian, is China's first Sino-foreign joint venture combining refining and petrochemical operations. Fujian Petrochemical, a 50-50 split joint venture between Sinopec and the Fujian provincial government, holds half of the 4.9-billion-US-dollar plant's interest. Exxon Mobil and Saudi Aramco hold equal shares of the remaining equity.

Traditional Chinese refineries cannot refine and process sour Arabian crude. Thus, in order to ensure the market shares in China and maintain exports to such a large oil consumer, the Arabian oil companies have been seeking to establish down-stream crude oil industries in China, mainly including refineries, storage, and transportation facilities.

Partners Celebrate Completion of $4.5 Bln Fujian Complex

ExxonMobil and its partners, Sinopec, Fujian Province and Saudi Aramco, on November 11 celebrated the full operation of China's first integrated refining and petrochemical facility with foreign participation. This facility, the Fujian Integrated Refining and Ethylene Joint Venture Project, will help meet the region's growing need for fuels and chemical products.

"Our participation in this world-class complex illustrates our commitment to the region and to provide our customers with the products they need," said Rex W. Tillerson, chairman and chief executive officer of Exxon Mobil Corp., who attended a ceremony in Quanzhou to mark the occasion.

"This is an unprecedented partnership built on years of collaboration. The support from our partners will help ensure the safety, reliability and best-in-class performance of these facilities."

More than $4.5 billion was invested in the complex, which tripled the capacity of the existing refinery to 240,000 barrels per day to produce transportation fuels and other refined products. In addition, the project added a new petrochemical complex that includes an 800,000 tons-per-year ethylene steam cracker, an 800,000 tons-per-year polyethylene unit, a 400,000 tons-per-year polypropylene unit and a 700,000 tons-per-year paraxylene unit.

The complex also features a state-of-the-art 250 megawatt cogeneration facility, which will meet the majority of the site's power demands. Cogeneration is the simultaneous production of electricity and useful heat or steam from waste energy, resulting in lower operating costs and significantly reduced greenhouse gas emissions.

Tillerson said integration between the refining, chemicals and fuels marketing operations provides significant synergies and helps protect overall profitability.

For example, a benefit of integrating refining and chemicals facilities is the synergy of feedstocks: refining streams are used as feedstock in the production of petrochemicals while byproducts from the chemicals' facilities are sent back to the refinery for conversion to high-value products, like motor fuels. Integration of manufacturing sites, like Fujian, allows ExxonMobil to maximize operating flexibility and capture associated cost savings.

The complex is jointly owned by the Fujian Petrochemical Company Limited (50 percent), ExxonMobil China Petroleum and Petrochemical Company Limited (25 percent) and Saudi Aramco Sino Company Limited (25 percent). It also is fully integrated with the Fujian Fuels Marketing Joint Venture, formally registered as "Sinopec SenMei (Fujian) Petroleum Company Limited," owned by Sinopec (55 percent), ExxonMobil China Petroleum and Petrochemical Company Limited (22.5 percent) and Saudi Aramco Sino Company Limited (22.5 percent). The venture manages and operates approximately 750 service stations and a network of terminals in Fujian Province.

Fujian Petrochemical Company Limited is owned 50 percent by China Petroleum and Chemical Corporation (Sinopec) and 50 percent by the Fujian Government. ExxonMobil China Petroleum & Petrochemical Company Limited is a wholly owned affiliate of Exxon Mobil Corporation and Saudi Aramco Sino Company Limited is a wholly owned affiliate of Saudi Aramco.

Shaw Group to Provide Tech, Design Services for Yanchang Olefins Recovery Unit

The Shaw Group Inc. November 18 announced it has been selected to license its proprietary Refinery Offgas (ROG) purification and recovery technology and supply process design services for a 1,500 kilo tonnes per annum (kTA) deep catalytic cracking (DCC) unit in Shaanxi province, China. The unit, which produces ethylene and propylene from heavy oil feedstock, is owned by Yulin Energy and Chemical Co. Ltd., a subsidiary of Yanchang Petroleum Group Co. (SYP).

Shaw's ROG technology will enable SYP's unit to produce an incremental 270 kTA of ethylene and 320 kTA propylene. Under the agreement, Shaw also will provide the technology for two Ultra Selective Conversion (USC) furnaces and other proprietary equipment, as well as technical support during basic and detailed design, commissioning and startup of the DCC unit.

The undisclosed value of the contract will be included in the Energy & Chemicals segment's backlog of unfilled orders in the first quarter of fiscal year 2010.

"SYP is a new client for Shaw, and we look forward to contributing our advanced technology and engineering capabilities, not only in traditional ethylene plants, but in broader olefins fields," said Lou Pucher, president of Shaw's Energy & Chemicals Group.

Sinopec's Research Institute of Petroleum Processing (RIPP) and Sinopec Engineering Inc. (SEI) will provide technology and engineering for the reactor/regenerator and primary fractionation sections of the DCC unit.

The award follows the successful startup of the first olefins unit to include commercial installation of RIPP's technology to convert heavy crude feedstock to ethylene and propylene. Shaw also provided its proprietary USC furnaces and basic engineering for this project.

SYP is a state-owned enterprise affiliated with Shanxi provincial government and one of four oil and gas exploration companies in China.

China’s CNPC Signs JV with Shandong Refiner to Build Oil Pipeline

China National Petroleum Corp. (CNPC), China's oil conglomerate, announced on November 30 that it has set up a joint venture (JV) company with the Shangdong Dongming Petrochem Group, a local refiner in east China's Shandong province.

The JV will be responsible for building and running the crude pipeline spanning from costal city Rizhao to the inland county of Dongming.

The crude pipeline, stretching 462 km, has a planned annual shipping capacity of 10 million metric tonnes in the first phase and 20 million tonnes in the second.

The project is expected to be completed and put into operation by the end of June, 2011. It involves 2 billion yuan of investment, said CNPC.

The Shandong Dongming Petrochem Group previously said that it would kick off an expansion project next year, which would increase its annual refinery capacity by 5 million tonnes, equal to 100,410 barrels/day.

The JV project implies that the local oil refiner will likely draw its crude from CNPC for its output expansion.

The Shandong Dongming Petrochem Group's current crude run is 10 million tonnes annually.

CNPC is the parent of PetroChina.

INDIA

BGR Energy Wins Three Contracts for LNG Regasification Terminal and Refinery Projects

BGR Energy the EPC Company for power projects has announced that the company has secured three contracts worth INR 45 crore.

As per report the company has won an order from CINDA a Taiwan-based largest integrated engineering and construction firm CTCI Corporation for design, engineering and supply of 72 bundles of air heaters for receiving and regasification terminal of Petronet LNG in Ko chi. The contract packages were to be delivered by November 2010.

The second contract is from HPCL-Mittal Energy Ltd for supply of air cooled heat exchangers for Guru Gobind Singh refinery project at Bathinda in Punjab. The deal is to be completed in eight months.

The scope of the contract includes design, supply, erection and commissioning of 46 air cooled heat exchangers at the project site for naphtha hydro treating unit and vacuum gas oil hydro treating unit.

The company has also won a contract from Essar Oil for the supply of 30 air cooled heat exchangers for its refinery expansion project at Vadinar in Gujarat in lieu of its earlier order for the supply of fin tube bundles for the same project.

The deal includes supply of air cooled heat exchangers at the site for hydrogen manufacturing unit and amine recovery unit. The package is likely to be delivered within seven months.

INDONESIA

Investors Show Interest in $4.5 Bln Indonesia Refinery Project

Rineft Gaz of Russia and Itochu of Japan, have indicated interest in taking part in the construction of a US$4.5 billion oil refinery in Indonesia's Bojonegera, Banten.

The two companies came up with an offer after negotiations between state oil and gas company PT Pertamina and STX Corp. of South Korea failed to come to a conclusion.

STX Corp. earlier reported that it had agreed to join a consortium, already formed by Pertamina and two other foreign investors to build the project, and provide financing, but it demanded a 40-percent stake in return.

Pertamina, National Iranian Oil Refining & Distribution Company (NIORDC) and Petro Field Malaysia have agreed to establish a joint venture to build the refinery.

Based on the earlier agreement, NIORDIC and Pertamina would each have a 40-percent stake and Petro Filed would have a 20-percent stake in the venture.

Rudy Radjab, the president of Perusahaan Daerah Bantan, which is owned by the regional administration, said Rineft and Itochu would agree to follow the plan by the consortium.

Radjab said that Rineft agrees to look for a supply of crude oil to feed the refinery, which is to have a processing capacity of 300,000 barrels per day.

SINGAPORE

Exxon Eyes Singapore Clean Diesel Project

U.S. energy major ExxonMobil is evaluating investments in its Singapore refinery to produce clean diesel to meet the region's growing demand for cleaner fuel products, its chief executive said on CNBC.

The company is expanding its integrated refinery and petrochemical complex in the city state, which will become its largest downstream facility in the world.

"The petrochemical plant will start up in a number of phases beginning in 2010 and will be full up in 2011," Exxon CEO Rex Tillerson said on CNBC.

When asked how Exxon plans to secure supplies in West Africa that Chinese majors have also set their sights on, Tillerson said, "We have to demonstrate the value we have--to the resource owner--the host government."

"That's the only way we can really respond because the Chinese have a whole lot more money than I have and so I can't get into a bidding war with them, and if it all comes down to who will pay the most money I'll probably lose," he said.

EUROPE / AFRICA / MIDDLE EAST

CZECH REPUBLIC

Czech Republic to Overhaul Cezcá Rafinérská Litvinov Refinery

The 109,000bpd Cezcá Rafinérská's Litvinov refinery, located in Litvinov, will undergo an overhaul in the third quarter of 2011. The future planned overhaul, which will entail mainly cleaning and inspection work, will be carried out in the Production Block that the refinery has, with 19 operational units in all. The shutdown will affect the 35,000bpd Crude 1, the 74,000bpd Crude 2, the 21,000bpd VDU 1, the 35,000bpd VDU 2, and the 15,000bpd Visebreaker, among others.

SOUTH AFRICA

PetroSA Toasts Milestone for Coega Refinery

National oil and gas company PetroSA has signed a co-operation agreement with the Coega Development Corporation with regard to the planned R10bn crude oil refinery in Coega, near Port Elizabeth.

The agreement, which the two companies said was a major milestone in the development of the 400000- barrels-a-day refinery, clarifies the roles and responsibilities of the companies in the Coega industrial development zone during the construction and operation of the refinery.

"The agreement provides for the CDC (Coega Development Corporation) to recognize PetroSA as the official developer and promoter of the proposed refinery, the establishment of a joint project team and a land allocation agreement for the refinery," the companies said.

The corporation, a government-owned entity, has a mandate to develop and manage the Coega industrial development zone. It must also facilitate investment in the zone.

PetroSA's refinery, due for commissioning either in late 2014 or early 2015, will be a major tenant in the zone.

The companies said they had agreed on the roles and responsibilities regarding future activities.

PetroSA CEO Sipho Mkhize said that the companies were considering developing secondary industries towards the establishment of a petrochemical hub serving southern Africa.

He said the agreement would give potential investors confidence that the project had the support of major players in the South African economy.

Mkhize said that PetroSA wanted to offer as much 62,5% in the refinery to potential equity partners.

ZAMBIA

Total Sells 50 Percent Stake in Zambia Refinery

French oil giant Total has sold its 50-percent stake in Zambia's sole petrol refinery to the government in Lusaka for 5.5 million dollars, the country's privately owned Radio Phoenix has reported.

Until now, Total and the government had shared ownership of the 36-year-old Indeni refinery, which has the capacity to produce 24,000 barrels of fuel per day.

Indeni has been plagued by technical problems and erratic supplies of late, causing acute shortages of diesel and petrol in the southern African country.

A fault at the plant brought production to a halt on October 15. The ministry of energy said it expected to resume processing in the near future.

The fuel shortages have affected the country's critical copper mining operations, which rely on diesel for production.

Zambia is Africa's largest producer of the metal, which accounts for about 70 percent of export revenues.

QATAR

Qatar Kentz Wins Laffan Refinery Turnkey Contract

The Laffan Refinery Company Limited (Laffan Refinery) recently awarded a multi-million dollar turnkey Contract to Qatar Kentz WLL for the Engineering, Procurement and Construction of a Receiving & Loading Facility to be built in Ras Laffan Industrial City (RLIC), Qatar.

The Laffan Refinery Venture plans to construct the Receiving and Loading Facility (known as the Gantry Project) which will allow distribution of Diesel products to the northern geographical vicinity of the State of Qatar, including RLIC. The project's commercial structure will be based on several shareholder companies owning a share of the asset however the maintenance and operation of the facility will be managed by the Operator (WOQOD).

The project scope includes developing an entirely new automated Gantry Facility designed for the loading of diesel product into road tankers (up to eight trucks simultaneously) as well as transfer by pipeline to the Ras Laffan Port area. These operations will be enabled by the installation of approximately 13km of pipeline inside RLIC and the facility is scheduled to be fully operational by 2011. The diesel will be produced by the first condensate refinery in Qatar (Laffan Refinery) which has a processing capacity of 146,000 barrels per stream day (BPSD).

Salman Ashkanani, Laffan Refinery-Venture Manager said "This project is of strategic importance to the State of Qatar as it creates vital new infrastructure for the distribution of diesel to the domestic market and builds upon the strategic vision started by the realization of the Laffan Refinery which became operational earlier in the Summer."

SAUDI ARABIA

Saudi Aramco Set to Award Yanbu Refinery Work Contracts to U.S. and Japanese Firms

MEED has reported that State run oil company Saudi Aramco is close to awarding a contract for a company to supply it with long lead equipment for its planned 400,000 barrel per day export refinery at Yanbu on Saudi Arabia’s west coast.

According to a source close to the project, the U.S.’ GE will win the award to supply a compressor and turbine package for the refinery. Aramco and U.S. contractor KBR, which is providing Aramco’s consultancy services for the Yanbu refinery, hope to award the deal to GE in November. The 2 firms also hope to award three other contracts for companies to supply long lead equipment.

The frontrunner for the coke drum contract is Japan’s Sumitomo Heavy Industries and Japan Steel Works should win a contract to supply a hydrocracker reactor. Japanese technology specialist Yokogawa Corporation should secure the award to supply the plant’s control system.

Aramco and KBR have also invited prequalified contractors to a meeting in Yanbu on November 8th 2009 to outline the details of a US$500 million solids handling contract at the refinery. The winner of the solids handling contract will build a sulfur pelletizer plant and coke storage unit at the refinery and a storage facility at nearby King Fahd Port. Bids for all of the main construction deals at Yanbu are due on January 31, 2010.

UNITED ARAB EMIRATES

ADNOC Awards $5.2 Bln in Contracts for Ruwais Refinery Work

The Abu Dhabi National Oil Company (ADNOC) has awarded the first contracts for a multibillion-dollar oil refinery project that will serve as the foundation for the emirate’s diversification into petrochemicals.

The Ruwais refinery will boost ADNOC’s crude oil processing capacity by 400,000 barrels per day, or 74 per cent, to produce fuels for export and raw material for two petrochemical complexes.

Two contracts worth a total of US$5.2 billion (Dh19.1bn) to build key equipment at the refinery were awarded to two Korean firms, the state news agency WAM reported November 3.

ADNOC’s decision to proceed with the project, which is estimated to cost $10bn in total, comes during a sustained downturn in refining margins.

Demand for refined fuels collapsed as a result of the financial crisis, and the market has an oversupply caused by the start-up of new refineries in the Middle East and Asia.

“Today you don’t need any more refinery capacity,” said Michael Corke, a refining expert at the energy consultancy Purvin and Gertz. “We anticipate this downturn in profitability will result in quite a few refinery closures.”

But Purvin and Gertz expects “significantly improved economics” by 2015 or 2016, Mr Corke said, a year or two after the plant starts up in 2014.

ADNOC officials have previously said they hoped to save between 30 and 40 per cent in construction costs in awarding the refinery contracts this year, and see demand recovering in several years.

The refinery contracts are the latest in a number of large investments by ADNOC on the downstream energy sector in a year of sharply reduced profits.

The Ruwais refinery will have “strategic benefits” to the development of petrochemicals, said Bill Sanderson, an analyst at Purvin and Gertz.

“The economics here are different than what we describe globally,” Mr Sanderson said.

The Korean firm SK Engineering and Construction was awarded a $2.1bn contract to build the refinery’s distillation unit, the first of seven packages on the project.

GS Engineering and Construction was awarded a $3.1bn contract for the refinery’s catalytic cracker unit.

SK said in an announcement it would deliver the distillation unit at the start of 2014.

The new refinery will boost ADNOC’s export surplus of naphtha, a light oil product, by 50 per cent by 2013.

About half of that surplus would be piped to Taweelah to feed Tacaamol, the chemicals complex that will be completed by 2014, Mohammed al Azdi, the chief executive of Chemaweyaat, the firm behind the project, said last month.

The refinery will also produce propylene, a raw material in plastics, for use in the Borouge plants in Ruwais.

TAKREER, the refining arm of ADNOC, expects to award five more contracts for infrastructure, a port and pipelines, WAM reported. TAKREER also stated that the project is due to meet commercial production by end of 2013.

Technip Wins $415 Mln UAE Gas Facilities Contract

Abu Dhabi Gas Industries Ltd (GASCO) has awarded Technip a lump sum turnkey engineering, procurement and construction (EPC) contract worth approximately US$415 million for the ASAB 3 Project.

This project is a revamp of existing facilities to support an increase in oil production from the new Abu Dhabi Company for Onshore Oil Operations (ADCO) facilities and accommodate up to 150 million standard cubic feet per day (MMSCFD) of additional associated gas from the existing Asab, Shah and Sahil oil fields. Technip is responsible for the installation of a new booster compression station, transfer lines, debottlenecking of existing ASAB 0 facilities and diverting feed flow from ASAB 0 to ASAB I/II by installing a new compressor, transfer lines and other associated facilities.

This project will be executed by Technip’s operating center in Abu Dhabi, United Arab Emirates. The first phase will be completed during the third quarter 2012 and the remaining phase during the second quarter 2013.

This award reaffirms Technip’s decision in March 2009 to create a new Middle East regional organization, based in Abu Dhabi as part of its strategy to increase proximity to its markets and clients.

Takreer Awards Remaining Ruwais Contracts

TAKREER (Abu Dhabi Oil Refining Co.) announced November 19 that the balance of three contracts worth US$4.4 billion have been awarded to three South Korean companies for engineering, procurement, construction and commissioning" (EPC) works of the Ruwais Refinery Expansion Project, the state-run Emirates News Agency reported.

TAKREER had announced on November 3, 2009, the award of two contracts worth $5.2 billion for the process packages of the project. This brings the total value of awarded contracts of the project to $9.6 billion.

Fourteen international companies competed for these three contracts. Samsung Engineering Co. Ltd. was awarded the Offsites & Utilities Package for a total value of $2.7 billion, Daewoo Engineering & Construction Co. Ltd. was awarded the Tankage & Associated Interconnecting Piping Package for a total value of $1.2 billion and GS Engineering & Construction Corp. was awarded the Marine Facilities Package for a total value of $500 million.

With the above awards TAKREER has concluded award of main packages comprising the Ruwais Refinery Expansion Project aimed at increasing the crude oil refining capacity by 417,000 barrel per day with latest advanced technology for down stream processing units to produce high quality products. The new refinery has been designed to comply with U.A.E. and International Environmental Standards.

McIlvaine Company,

Northfield, IL 60093-2743

Tel: 847-784-0012; Fax: 847-784-0061;

E-mail: editor@mcilvainecompany.com