Editorial comment
Not that long ago I had a valuation carried out on my apartment. Let’s face it, everyone wants to be told that their property has gone up in value since they moved in and made some improvements. However, this isn’t always the case, particularly when it comes to the refining industry. Since the recession hit, numerous refining facilities have been taken offline. Some were only meant to be down for a small period of time and were never restarted, and the majority of these closures ended up in sales or refinery to terminal conversions. Also, numerous refineries have been put up for sale and sold or converted, as they were not fulfilling their economic projections. This is a trend that has lasted for some time and, in my humble opinion, will last for a while. But is it all bad?
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Over the last 18 months, in Europe alone, 18 refining facilities have been put up for sale or converted. This has been attributed mainly to refineries having to deal with rival fuels and foreign refineries replacing the oil demand and crushing profits. At the time of writing, 196 refineries were offline, outmoded and inoperable in the US with a large portion being converted into terminals and storage facilities. The US refinery closures are undoubtedly a consequence of the financial crisis, however, many that have been made redundant are small, simple facilities that were constructed with government subsidies and grants in the 1950s.
One of the most notable refinery sale/purchase agreements this year has been between INEOS and PetroChina. INEOS sold a 50% share in the Grangemouth, Scotland and Laverna, France refineries which have a combined capacity of 420 000 bpd for US$ 1 billion. This partnership and sale is not something to be shied away from by INEOS as it has provided them with a foot into the Chinese market and possibly a large portion of the entire Asian oil market. Also, the overseas investment will ensure that the facilities are kept onstream providing jobs and security of supply to Europe. This purchase definitely has more benefits than drawbacks.
Of course, the conversion of a refining facility into a terminal has its downside. For example, a terminal does not need as much manpower to keep it in operation as a refinery. We have all witnessed over the last 18 months conversion plans being granted for refining facilities that have not been successfully sold and transformations beginning to take place. I for one can see the positives in this happening (as well as the negatives). Rather than a facility being completely abandoned, the conversion process will provide contractor jobs and some of the remaining refinery jobs will still be in play, as terminals need operations staff. Also, as countries strive to gain security of supply and boost strategic reserves, additional storage capacity is not something to be scoffed at. This extra room is possibly going to be of particular use in the US where production of oil and gas from unconventional sources such as shale and the oilsands is picking up.
It is clearly a balanced argument when it comes to refinery closures, sales and conversions. Yes, jobs can be lost and economic instability in the area of the facility can become more prevalent. However, it appears that such sales and conversions do enable markets to be expanded, provide and maintain jobs, and bring security of supply that little bit closer.
On page 12 you will find the regional report from the Euro Petroleum Consultants looking at European Refining. Also, as this is one of our plant safety issues, you will find articles from Honeywell and ABB as well as articles from Grace and Intertek in our extensive catalyst feature, to name but a few. Finally, turn to the last page for 15 questions with Merichem’s Director of Catalysts.