Shell refinery to shut for a month?

Dylan Loh Channel NewsAsia 30 September 2011 2059 hrs

SINGAPORE: Industry sources have said Shell's fire-hit Pulau Bukom oil refinery may remain shut for at least a month.

This comes as efforts are now in place to further secure the incident site for investigation to safely commence.

Singapore's Deputy Prime Minister and Minister for Home Affairs Teo Chee Hean visited the area on Thursday night and on Friday morning to assess the situation.

In a media statement, Mr Teo said there has been good cooperation between Shell and the Singapore Civil Defence Force (SCDF).

He noted the good mutual assistance in the industry.

Mr Teo said the key thing now is to make sure the fire does not re-ignite and that residual hydrocarbons from the flames are properly dealt with.

He added that going forward, Singapore should learn from this incident and prevent such fires in future.

Shell is tight-lipped about how much money is going up in smoke due to the incident at its biggest refinery.

But some analysts said disrupted production would affect regional supplies of Shell's products in the short term.

To prevent further disruptions, firefighters are standing by at Pasir Panjang Ferry Terminal just in case.

SCDF said water jets were being used to disperse traces of fuel vapour.

In addition, it is conducting foaming operations at certain parts of the incident site.

-CNA/wk

Govt to probe Bukom refinery blaze
MOM deploys officers to investigate, will examine Shell's safety framework
Jennani Durai & Jermyn Chow Straits Times 1 Oct 11;

THE Ministry of Manpower (MOM) has stepped in to investigate the cause of the fire at Shell's Pulau Bukom refinery.

It said yesterday that two investigators from its occupational safety and health division have been deployed to the island, and are working with Singapore Civil Defence Force (SCDF) officers.

A ministry spokesman said MOM will also work with Shell to examine its safety framework so that safety standards can be tightened to prevent another such fire.

The move comes hours after more than 100 firefighters struggled to extinguish the on-off flames.

SCDF said yesterday that the fire was finally put out at 9.18pm on Thursday, ending a 32-hour battle. It added that it will keep 100 firefighters and 34 vehicles on the island as a precaution.

Mr Ho Siong Hin, MOM's Workplace Safety and Health Commissioner, said his officers will focus on looking for what might have sparked off the fire, which was described by Shell and SCDF as 'erratic' and 'complex'.

Incidentally, Mr Lee Tzu Yang, the chairman of Shell Singapore, also chairs the Workplace Safety and Health Council.

The cause of the fire has yet to be established.

It began at 1.15pm on Wednesday in the pump house, an area of interconnecting pipes containing fuel compounds.

SCDF said yesterday it was using water jets to disperse traces of fuel vapour. It was also using foam at certain sites.

Yesterday morning, Deputy Prime Minister and Home Affairs Minister Teo Chee Hean visited the island for about an hour to assess the situation.

Speaking to The Straits Times at the Pasir Panjang ferry terminal, he said there had been good cooperation between Shell and SCDF, and there was also 'good mutual assistance in the industry'.

'The fire has been extinguished. The key thing now is to make sure that it does not reignite, and the residual hydrocarbons from the fire are properly dealt with,' said Mr Teo, who is also Coordinating Minister for National Security.

'We also want to make sure that the risks are properly handled and reduced. Going forward, we should learn from the lessons and prevent the occurrence of such fires.' He was also at the operations centre at the ferry terminal on Wednesday night.

A contractor who left Bukom at around 5pm yesterday said: 'There is a cordon around the pump house that we can't go near, but other than that, everything is normal and we can all go to work.'

Even as the worst appears to be over, Shell sources confirmed that the progressive shutdown of the Bukom facility was continuing.

Although some wire reports said the shutdown could last a month, a Shell spokesman said that no timeline has been given for how long it will continue or for when the investigations will be complete.

'Our first priority is to tackle the incident safely. We do not expect any of the units to be restarted until a thorough investigation has been done and we are confident that it is safe to do so,' she said.

The oil giant also released a statement expressing 'heartfelt appreciation to the SCDF for their tireless efforts in working closely with Shell in containing the fire'.

Pulau Bukom is Shell's largest refinery in the world, processing 500,000 barrels a day. Ninety per cent of the products are exported to the Asia-Pacific region and beyond.

CIMB economist Song Seng Wun said that depending on how long the refinery remains in downtime, 'Singapore's chemical output and exports will be affected'.

'There was fire everywhere. It was just boom, boom, boom!'
Jalelah Abu Baker Straits Times 1 Oct 11;

A SHELL employee who saw much of the action in the refinery fire this week told The Straits Times that he knew something was amiss when the fire alarm went off at 1.15pm on Wednesday.

The Shell Eastern Petroleum Complex has a weekly fire drill at 1.30pm on Wednesdays, like clockwork, but this week, the bells rang 15 minutes earlier than usual.

The employee said that before he fully grasped what was happening, the in-house emergency team had been mobilised, and the first fire engine was on site.

He told The Straits Times in an interview at the Pasir Panjang Ferry Terminal yesterday that this week's mishap was the worst he has seen in his decades of working on the island.

This newspaper is not naming him to protect him, as Shell has barred its employees from talking to reporters.

It was chaos, he said, as fire engines rolled into the facility one after another.

He heard 15 explosions over Wednesday and Thursday, and was no more than 20m away when one of them went off.

'My man told me to run, but I just walked very quickly. After 15 to 20 steps, I heard a blast, and the heat was very strong,' he said.

The first of Thursday's explosions came at 11.45am, just when firefighters were winding down their work. A blast rang out, and he saw flames shoot out horizontally, he said.

Shaking his head several times during the interview, he said: 'That was one of the worst. After that, there was fire everywhere. It was just boom, boom, boom!'

The employee said he had a look at the pump house and was dismayed at the extent of the damage. 'It is bad. More than 100 lines are ruptured,' he said, referring to the pipes used to transfer oil to ships.

The metal platform normally used by technicians is warped from the extreme heat, he added.

Metal discs called spades in the industry had been placed in the pipes to stop the oil from moving, but the pipes caught fire from the heat and burst, he said.

A fire engine which was discharging foam had trouble with one of its mechanical arms, he said, and would not direct foam at the right spot. The foam hit a man in the area instead, causing him to lose his footing.

The Shell employee said firefighters were still spraying foam and water as he left the island at about 4pm yesterday.

He said that although the refinery's operations would be affected because the crippled pump house performs an important function, it is possible to divert the pipes.

He added that when the fire started in the pump house, there appeared to be only two people there. He did not know how it started, but maintenance work was going on there, so it was likely for sparks to have arisen - even from equipment falling down or from some knocking.

The cause of the fire is being investigated as several employees returned to work yesterday, but many parts of the plant are expected to be shut down in phases over the next few days.

Shell refinery fire in Singapore to affect Asian supply
Channel NewsAsia 30 September 2011 1332 hrs

SINGAPORE - A fire that disrupted production in Shell's largest refinery will affect regional supplies of gasoline and other products in the short term, analysts said on Friday.

Industry sources said the refinery may remain shut for at least a month.

This comes as efforts are now in place to further secure the site for investigations to safely commence.

The Anglo-Dutch oil giant said the fire broke out Wednesday at its refinery in Pulau Bukom, an islet five kilometres (three miles) off Singapore, prompting the evacuation of non-essential staff.

The fire was extinguished before midnight Thursday, 34 hours after it began, with the help of the Singapore Civil Defence Force.

No fire or smoke was visible at Pulau Bukom from the Singapore mainland on Friday, an AFP photographer said.

Shell spokesmen could not be reached for comment on the refinery's current status but the company said on Thursday that it had started a progressive shutdown of the whole refinery before the fire was put out.

Six people suffered superficial wounds and three fire engines were damaged from the fire.

In a statement issued overnight, Shell said it was "prepared to shut down all refinery units if this is considered necessary from a safety perspective."

Analysts said the fire at the refinery - which has a crude refining capacity of 500,000 barrels per day and produces fuels, lubricants and specialty chemicals - will affect regional supply of gasoline and petrochemical products in the short term.

"It is the biggest (Shell) refinery, it supplies and exports a whole lot of products. Ninety percent of their exports go to the Asia-Pacific region," said Shailaja Nair, Asian managing editor of market information provider Platts.

"It has a whole slate of products, not just oil but also the petrochemicals because it's an integrated complex. So when you're shutting something down there is bound to be some effect on the market," she told AFP.

Nair added that gasoline supply could be hit particularly hard.

The refinery fire also occurred at a bad time for Shell, said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo, as Asia heads towards winter and its peak demand period for distillate oil, used in heating.

"We're going into the high distillate demand season... and I think there was pull for distillates in Asia region from various areas of the world," he told AFP.

The disruption "will have a significant impact" on regional supply of petroleum products, Nunan added.

However, analysts stressed that they could only gauge the fire's short-term impact on supply, as longer-term effects would depend on how quickly Shell can get the refinery running normally.

"At the end of the day, the shutdown of barrels might provide a bit of a squeeze but it won't really affect the overall market," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.

- AFP/CNA/al

Shell turns buyer in swaps market
Traders see prices of middle distillates such as kerosene and diesel staying firm
Ronnie Lim Business Times 1 Oct 11;

SHELL, usually a big seller of products such as diesel in Singapore's swaps market, has turned buyer to help meet its customer commitments, traders told BT yesterday, adding that prices of middle distillates such as kerosene and diesel are likely to stay firm.

This follows the oil group's earlier shutdown of its Bukom hydrocracker which produces mainly diesel, for safety reasons, followed by that of three crude distillation units which are the backbone of its 500,000 barrel per day refinery. Bukom, Shell's largest manufacturing site worldwide, accounts for 36 per cent of Singapore's total refining capacity.

A Reuters report cited industry sources speculating that Bukom could remain shut for even as long as a month. Reuters also quoted traders as saying that they had been told by Shell that it was declaring force majeure on deals with them.

Speaking to the media on Thursday, Shell Singapore chairman Lee Tzu Yang had not ruled this out. He had said: 'We are currently in discussions with our customers to meet their needs.'

A London spokesman, however, denied that force majeure had been declared.

Shell said that it had extinguished the blaze on Thursday night. In an update yesterday afternoon, it said that it was continuing to monitor the situation.

'Fire-fighting personnel from the Singapore Civil Defence Force and Shell remain on standby on Bukom. Efforts are now in place to further secure the site of the fire to allow investigations to commence safely.'

Martjin van Koten, Shell vice-president for manufacturing operations east, told the media on Thursday that the company had started a two-day sequence to shut down the CDUs - so as to help it focus on fire-fighting and not be distracted by having to operate 'live' plants safely at the same time.

While he declined to say if the shutdown sequence could be interrupted if needed, another refinery source told BT that 'it depends on what stage(of shutdown) you are at'.

'The start-up process usually takes as long as the shut-down sequence, although there is also a knock-on effect as some plants depend on other plants, so there's a first-in-last-out sequence to follow. It also depends on further action needed, like clean-up procedures etc.'

Apart from the three CDUs, Shell had earlier also shut down two other plants which were sited closer to the fire - a hydrocracker, which upgrades feedstock from the CDUs into higher-value kerosene (jet fuel) and diesel, as well as a thermal gas unit. And these also have to be re-started.

But as Shell has still not established the source of the blaze - which it believes was accidentally set off by a maintenance job - it will need to carry out thorough investigations first and carry out remedial action, before it wants to resume operations.

'Those guys are really keeping it close to their chest,' one oil trader told BT, when asked if he had heard from Shell counterparts when they expect Bukom to resume operations. 'We don't know what kind of delays there will be for cargo loading for instance, especially with the Bukom berths closed.'

In the meantime, 'the impact of the Shell fire and shutdown is having an impact on the prompt, or immediate market for October swaps, especially for middle distillates like kerosene and diesel,' the trader said, adding that prices were up about 15 per cent.

This is despite Shell earlier saying that it could continue to supply the market from storage and the group's network of other regional refineries including in Malaysia and the Philippines.

'We expect product prices to stay firm, as Sietco (Shell International Eastern Trading Company) which is a very active player in the Platts trading window here and usually a big seller of diesel, completely disappeared from the selling end, and was buying instead,' a local trader told BT.

Singapore Shell refinery will take at least a month to restart-sources
Reuters 30 Sep 11;

SINGAPORE, (Reuters) - Oil major Shell's fire-stricken Singapore refinery, its largest in the world with a 500,000 barrels-per-day (bpd) capacity, is expected to remain shut for at least a month, as efforts now turn to investigating the cause of the 36-hour blaze, industry sources said on Friday.

The impact of the shutdown is expected to be most keenly felt in the Asian gasoline and distillates market, where Shell is a major supplier as well as a trader, although the severity of the impact depends on the eventual duration of the shutdown.

Shell's spokesman did not immediately comment about the source-based information.

(Reporting by Yaw Yan Chong; Editing by Miral Fahmy)

UPDATE 2-Shell Singapore plant may shut for a month; distillates force majeure
* Shell's Singapore refinery may be shut for at least a month
* Declares force majeure on distillate sales from plant
* Impact may be mostly felt in gasoline, distillates markets (Adds details on declaration of force majeure)

Francis Kan and Yaw Yan Chong Reuters 30 Sep 11;

SINGAPORE, Sept 30 (Reuters) - Royal Dutch Shell's (RDSa.L) Singapore refinery may remain shut for at least a month, industry sources said, and the company declared it would not meet supply commitments after a blaze at the major 500,000 barrels-per-day plant.

Singapore is Asia's hub for crude and oil products trading.

Shell exports about 90 percent of the output from the refinery, the company's biggest, which accounts for a quarter of the island nation's capacity.

So the impact on regional prices may be exaggerated by comparison with the capacity taken offline, traders said.

Shell declared a force majeure on sales of distillates, using a clause in contracts that exempts buyers or sellers from commitments due to events that are beyond control, counterparties said.

Shell's Singapore spokesman said the company would not comment on operational matters.

A refining source said: "By all accounts, the fire is a massive disaster. And it would take some time to investigate the cause, isolate it and also repair the damage. And then restart the parts that are unaffected."

"One month would be a very conservative estimate in terms of the duration it would take for the plant to return to normal operating levels. It could be longer depending on where the problem is," the source added.

Another industry source also estimated the outage could last at least a month.

The refinery produces 6.5-7.0 million barrels of distillates per month, of which gas oil is about 4.5 million barrels. It also produces another 4.0-4.5 million barrels of gasoline, based on estimates culled from its capacity.

At least two buyers said they had received notice from the oil major that it was declaring force majeure on all its nominated sales for cargoes to be lifted from the Singapore Bukom refinery.

The note, titled 'Notice Of Force Majeure' said: "In the circumstances, we have no alternative but to formally declare that our ability to supply the product under the contract has been adversely affected by an event beyond our control."

MARKET REACTION

Oil product markets, which had rallied strongly a day earlier, fell as concerns oversupply disruptions eased. The prompt October/November timespreads for gas oil, naphtha and fuel oil swaps fell by midday from Thursday's milestone-highs.

Short-term supplies remain disrupted as berthing operations were still down. At least five medium-ranged tankers, of 30,000 tonnes each, were waiting to load distillates, while another two were waiting to discharge fuel oil.

As a result, cash differentials for gas oil were bid at higher levels at premiums of 50-70 cents to Singapore spot quotes, versus 25-cent value a day ago.

Gasoline's physical crack to Brent crude held firm at month-high levels of around $13.00 a barrel for a second session.

Martjin van Koten, Shell's vice-president for manufacturing operations, said on Thursday that the fire occurred white maintenance work was being carried out at a Pump House near a 35,000 bpd distillate-making unit. (Additional reporting by Seng Li Peng, Alejandro Barbajosa, Francis Kan and Luke Pachymuthu; Editing by Manash Goswami and Anthony Barker)

Shell refinery fire in Singapore to affect Asian supply
Philip Lim (AFP) Google News 30 Sep 11;

SINGAPORE — A fire that disrupted production in Shell's largest refinery will affect regional supplies of gasoline and other products in the short term, according to analysts.

The Anglo-Dutch oil giant said the fire broke out Wednesday at its refinery in Pulau Bukom, an islet five kilometers (three miles) off Singapore, prompting the evacuation of non-essential staff.

The fire was extinguished before midnight Thursday, 34 hours after it began, with the help of Singapore civil defence units.

No fire or smoke was visible at Pulau Bukom from the Singapore mainland on Friday, an AFP photographer said.

Shell spokesmen could not be reached for comment on the refinery's current status but the company said Thursday that it had started a progressive shutdown of the whole refinery before the fire was put out.

Six people suffered superficial wounds and three fire engines were damaged from the fire.

In a statement issued overnight, Shell said it was "prepared to shut down all refinery units if this is considered necessary from a safety perspective."

Analysts said the fire at the refinery -- which has a crude refining capacity of 500,000 barrels per day and produces fuels, lubricants and specialty chemicals -- will affect regional supply of gasoline and petrochemical products in the short term.

"It is the biggest (Shell) refinery, it supplies and exports a whole lot of products. Ninety percent of their exports go to the Asia-Pacific region," said Shailaja Nair, Asian managing editor of market information provider Platts.

"It has a whole slate of products, not just oil but also the petrochemicals because its an integrated complex. So when you're shutting something down there is bound to be some effect on the market," she told AFP.

Nair added that gasoline supply could be hit particularly hard.

The refinery fire also occurred at an bad time for Shell, said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo, as Asia heads towards winter and its peak demand period for distillate oil, used in heating.

"We're going into the high distillate demand season... and I think there was pull for distillates in Asia region from various areas of the world," he told AFP.

The disruption "will have a significant impact" on regional supply of petroleum products, Nunan added.

However, analysts stressed that they could only gauge the fire's short-term impact on supply, as longer-term effects would depend on how quickly Shell can get the refinery running normally.

"At the end of the day the shutdown of barrels might provide a bit of a squeeze but it won't really affect the overall market," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.