What really happened at Motiva?

What really happened at Motiva?

In a stunning reversal of fortune, Motiva Enterprises had to shut down major operating units at its Port Arthur refinery only weeks after celebrating the completion of a $10 billion expansion that made the facility the largest oil refinery in North America.

As a result, reports indicate Saudi Arabia has halted crude shipments destined for the new unit until at least mid-July. The state-owned oil company Saudi Aramco – a co-owner of Motiva – had increased shipments to the plant earlier this year to feed the expanded refinery. Any resumption of those shipments would depend on the status of repairs, with time and cost estimates varying wildly. Optimistic reports said the repairs at the refinery could take two to four months and cost more than  a million dollars, while other estimates put the timetable at up to a year with costs that could reach a billion dollars.

The company has been circumspect in its comments on the situation. Motiva Enterprises is co-owned by Saudi Aramco and Royal Dutch Shell Plc. Houston-based Shell Oil Company spokesperson Emily Oberton released a statement that is succinct and represents the company’s total comment to date.

“Motiva continues to move forward with its response to the operational issues experienced at its Port Arthur Refinery expansion project. The original Port Arthur refinery, which has 275,000 (barrels a day) of distillation capacity continues to operate as per plan. The crude distillation unit at the 325,000 (barrels a day) expansion project has been impacted by corrosion problems and has been safely shut down. All expansion units other than the crude unit are fully operational, though some of those units are running at reduced throughput. The outage of the new crude unit may continue for several months, while the causes of the issue are established and rectified,” said Oberton’s statement.

As for any timetable for the repairs, Motiva was noncommittal. Its statement concluded, “Asset integrity and reliability are high priorities for the refinery, and Motiva will resume normal operations as soon as it is appropriate to do so. As always, the safety of our employees and protection of the environment will continue to remain our top priority while we address this issue.”

These statements from Motiva did little to quell speculation over the nature of the “corrosion problems” and the resulting fires that necessitated the shutdown. Media reports quickly moved to fill that information gap.

Fire in the hole

June 9, two fires broke out in the new unit at the Motiva Port Arthur refinery. Although company officials declined to discuss the incident, it was vividly described in a June 21 Reuters story by Houston-based reporter Erwin Sheba that attributed the cause to “a small chemical spill — perhaps less than a barrelful” — of so-called “caustic” that was “inadvertently seeping into the newly built crude distillation unit (CDU), the 30-story-high network of interconnected cylinders and latticed pipelines at the heart of the refining process. While harmless when mixed with crude, the undiluted caustic vaporized into an invisible but devastating agent of corrosion as the chamber heated up to 700 degrees Fahrenheit; the chemical gas raced through key units, fouled huge heaters and corroded thousands of feet of stainless steel pipe.”

Sheba’s original story, which was more than 2,000 words in length, offered the most detailed account of the incident in a report that relied heavily on unnamed sources, not unusual in this close-mouthed industry where secrets are closely guarded for competitive reasons – and because of custom and tradition. Shell spokesperson Oberton pointedly refused to discuss the Reuters report.
Reuters reported that Motiva “has developed a working theory on what experts said appeared to be a rare instance of ‘accelerated chemical corrosion.’ The unit’s intense heat was critical: the rate of corrosion can double with every 10 degrees Celsius.

“Even as it pitted the inside of the atmospheric section, a giant still that performs the initial and most basic stage of converting crude oil into fuel, the damage went undetected. Only when two fires broke out and a heater ruptured — once crude resumed flowing — did operators suspect something was amiss.

“‘They had the first fire and then they had the second one 20 feet away. They knew they had a problem,’” one of the sources said in the Reuters story.

“Why caustic continued flowing into the unit while it was idled to repair an unrelated leak is unclear, and is a key part of the investigation to establish cause. It is thought a valve failed to shut completely, but why that happened is unknown.”

Time will tell how accurate Sheba’s sources are on the inside story, but other speculation goes far beyond the “caustic” scenario. One industry source contacted by The Examiner who did not wish to be identified for this story said the report the crude unit had been shut down due to corrosion issues was “not plausible.”

The source said he could not recall a new unit being shut down for any such reason during his 34 years in the industry and said he had information the construction was flawed due to contractors using the wrong welding rods to make the welds to construct the unit.

“I can understand Motiva not wanting any such reports released,” he said. “Getting them to report any such reasons would be very incriminating to the contractors doing the work, as well as to Motiva’s own inspection process for new construction.”

While confirming such a report is difficult to impossible in the current environment, such speculation is likely to continue until definitive causes are established – and made public.

Other speculation centered on the length and cost of the repairs. Bloomberg reported on June 12 that the Motiva refinery could be closed for up to five months to repair multiple deficiencies that surfaced during the plant’s startup. Reuters reported that Motiva “must now reassemble many of the same people and parts for a blitzkrieg fix that may exceed the original $300 million cost of the unit.” That expense will come as “corrosion experts are flying in from across the world; hundreds of workers are being hired” and “30-story cranes may need to be obtained quickly, according to sources involved in the repairs.”

The combination of secrecy and speculation makes this a difficult story to cover, but reporting efforts will continue.

Business Journal editor James Shannon offers a weekly column of business news for readers of The Examiner. For more details, see the editions of the Business journal published monthly in Beaumont, Port Arthur and Greater Orange. Check out the blog at setxbiz.blogspot.com or e-mail james [at] beaumontbusinessjournal [dot] com.