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UPDATE 1-Shell restarts 2nd crude unit at fire-hit Singapore plant
* 2nd CDU of 110,000-bpd capacity operating at 75 pct
* 35,000-bpd hydrocracker to restart in next 2-3 days
* Alternative delivery for clean products key to restart
By Yaw Yan Chong
SINGAPORE, Oct 17 (Reuters) - Royal Dutch Shell Plc has restarted a second crude distillation unit (CDU) at reduced rates at its fire-hit Singapore refinery, a week after the first was partially restarted, three industry sources with direct knowledge of the matter said on Monday.
It is also expected to restart its distillate-making hydrocracker at the 500,000 barrel-per-day plant, Shell's largest, within the next 2-3 days, they added.
"We can confirm that some operations have continued and some operations will resume at the site, but we are unable to comment on operational specifics," said a Shell spokesman in response to queries on the restart.
The sources said the 110,000-bpd CDU, which began restart operations last Sunday and will reach stable operating levels in 2-3 days, is expected to run at a reduced rate of around 75 percent.
The CDU operations will facilitate the restart of the 35,000-bpd hydrocracker, which was shut due to its proximity to the fire but was undamaged, as well as provide more feedstocks, mainly heavy kerosene, for Shell's ethylene cracker.
With the second CDU partially operating, the refinery is currently running at about 40 percent capacity as its largest 210,000-bpd capacity CDU has been functioning at about 50 percent capacity for around a week.
A third CDU, of 110,000-bpd capacity, and some other smaller secondary units are still shut in the aftermath of the more than 30-hour blaze that largely crippled the plants capability to deliver clean oil products, such as gas oil, jet fuel, gasoline and naphtha.
ALTERNATIVE DELIVERY SYSTEM
"Shell is slowly trying to get the CDUs and the main secondary units back up at reduced rates, primarily to yield products that are high margin, such as base oils and lubricants, as well as petrochemicals," one of the sources said.
"The key to this is to create an alternative, but stable, delivery system, that bypasses the damaged area, of transporting the products into storage or onto tankers. This is possible because the major units are largely undamaged."
The restart of the plant's operations is moving in line with the stage-by-stage construction of the delivery system, and the third CDU is also expected to be operational at partial levels in about a week, the sources said.
The plant is expected run at reduced rates over the next 2-3 months as the replacement delivery system is gradually put in place, while runs are slowly ramped up, amid repairs to the Pump House area where the fire occurred.
Full repairs to the damaged area are expected to take about a year, the sources said.
"So enough lines have to be built to allow the plant to operate at an efficient level of production, possibly even run at full, maybe in about a month or so from now," one source said.
Shell has also resumed loading for some of the affected products, mainly gas oil, which saw its first loading, post-fire, about a week ago.
It also sold 150,000 barrels of 0.5 percent sulphur gas oil, for loading over Oct. 27-31, over the end-of-day pricing window last Wednesday.
The sale was on the back of agreements that the oil major had with counterparties to buy back most of the 1.5 million barrels of distillate cargoes that it had declared force majeure upon.
Shell is a major supplier of distillates and gasoline to the region, with its refinery producing 6.5-7.0 million barrels per month, of which gas oil is about 4.5 million barrels, and another 4.0-4.5 million barrels of gasoline, with about 90 percent of the refinery's output exported.
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