* Repairs to fractured pipe could take several days, sources
* 325,000 barrel per day crude unit was in process of
* New crude unit had previously been shut due to corrosion
* Gasoline prices jump on fire, pare gains after damage
By Erwin Seba
PORT ARTHUR, Texas, Dec 12 Motiva Enterprises
aborted the restart of a major new crude oil unit at
its Port Arthur, Texas, plant after a fractured pipe caused a
small fire late on Tuesday, the latest glitch to bedevil the
country's biggest refinery.
The fracture on a line that feeds pre-heated crude into the
325,000 barrel per day (bpd) unit should not take more than
"several days" to repair, a source familiar with operations at
the plant told Reuters. No formal timeline has been set and
investigation crews are expected to start work on Wednesdya.
Reports of the fire helped cause U.S. gasoline
and heating oil futures to jump by nearly two percent in
early trade. Gains ebbed after it was clear that the outage was
not likely to be as severe as the chemical corrosion in June
that forced the unit to close for the past six months.
Motiva was in the process of restarting the crude unit and
had expected it to be fully operational by early 2013.
Kimberly Windon, a spokesman for Motiva, a joint venture of
Saudi Aramco and Royal Dutch Shell, said the unit
remains on track to fully restart by early 2013 despite the
Windon confirmed that a "very small" pipeline leak and fire
had occurred around 10 p.m. CST on Tuesday. She said that it was
quickly extinguished and that the unit was safely shut down
without suffering any damage.
"We anticipate making the necessary adjustments/repairs and
returning the unit to normal operations in an expeditious
manner," she said in an email.
The fire isn't believed to have caused significant damage,
the sources told Reuters, but it spooked traders fearing that
another prolonged disruption could impact fuel production and
supplies along the Gulf Coast, the U.S. refining hub.
"The additional supply is sorely needed, and the plant's
apparent fragility has made the market nervous that full
operation may still be a ways off," said John Kilduff, partner
at Again Capital LLC in New York.
However, the U.S. Energy Information Administration said on
Wednesday that Gulf Coast gasoline stocks gained 1.7 million
barrels last week, on top of a 2.4 million-barrel build the week
before, on refinery utilization of 95.4 percent.
While cash gasoline differentials saw a small gain in early
trade on the Motiva news, they later held steady at double-digit
discounts to January RBOB futures on the New York Mercantile
U.S. gasoline futures rose to nearly $2.67 a gallon
in earlier trading, before retreating to around $2.64 a gallon
by late morning after the EIA data showed that U.S. gasoline
stocks rose by a larger-than-expected 5 million barrels last
The disruption in operations at Port Arthur was first
reported by industry monitor Genscape, which said it had
detected "significantly decreased" activity at the plant's crude
and vacuum distillation units. The fire was first reported by
industry publication Energy News Today.
The aborted restart could compound woes for the plant's
owners, who have spent around $10 billion over five years to
expand Motiva into the nation's biggest plant.
The VPS-5 crude distillation unit - a key component of the
expanded 600,000 bpd refinery - has suffered several setbacks
since it first began processing crude in April.
"The reason this start-up is given such importance is that
it's really the largest refinery start-up in U.S. history," said
John Auers, senior vice president and refining specialist at
Turner, Mason & Co. in Dallas.
He said preliminary reports suggested that the incident
wouldn't affect his forecast for the plant to fully resume
operations in the first quarter. And while it's not uncommon for
a refinery to experience operational hiccups, he said oil
traders may "start to wonder whether it is a trend".
The unit was initially shut down in early June to
investigate a small leak. In the process of restarting it after
brief repairs, caustic sodium hydroxide that had leaked into the
system was vaporized, cracking and pitting some of its piping.
Tuesday night's fire occurred on the same feeder pipeline that
was the original source of June's trouble, the sources said.
The unit is designed to do the initial refining of crude oil
coming into the refinery and to provide feedstock to other
units. In addition to boosting plant capacity, VPS-5 is intended
to allow Motiva to process a wider variety of crude oils.
The sodium hydroxide - normally mixed with heavy, sour crude
oil to prevent fouling equipment - caused widespread corrosion
after being vaporized as the unit was being restarted. It
required six months of repairs using stainless steel components
that would resist a similar leak.