Lyondell cuts output at Houston refinery after fire: sources

Reuters News
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Posted: Apr 08, 2016 11:28 AM

By Erwin Seba

HOUSTON (Reuters) - Lyondell Basell Industries has cut production at its 263,776 barrel-per-day (bpd) Houston refinery by as much as 25 percent for between 10 days and a month to fix a coker damaged in a Friday morning blaze, sources familiar with operations told Reuters.

No injuries were reported from the fire on the coker, Lyondell said.

The fire, which erupted at about 10 a.m CDT at the refinery, blanketed a swath of Houston with black smoke and emergency officials urged nearby residents to stay inside with windows closed and air conditioners off to avoid inhaling the fumes in the fourth-largest U.S. city.

Fire fighters from Houston, neighboring suburbs, refineries and chemical plants were summoned to battle the blaze, the second in as many days at a Houston-area refinery.

On Thursday, a fire broke out at Exxon Mobil Corp's Baytown, Texas, refinery, but was extinguished within an hour, caused no injuries and did not affect main production units.

The Lyondell fire broke out in a pump on the 42,000 barrel-per-day (bpd) delayed coking unit, the smaller and older of two at the refinery, the sources said. The same coker underwent a six-week overhaul that finished in March, but the pump was not included in that project.

The length of time needed to repair and return the coker to production depends on the extent of damage, the sources said.

About half of U.S. refining capacity is located in plants along the U.S. Gulf Coast.

The U.S. gasoline crack spread, a widely used benchmark for refiner margins, extended gains Friday, rising by 2.35 percent to $21.79 per barrel in the minutes after the Reuters report of the fire at the Houston refinery. The crack spread was up roughly 5 percent on the day.

Canadian heavy crude differentials fell on Friday, with May trading at $15.05 a barrel below WTI, according to Shorcan Energy brokers, down 30 cents from Thursday's settlement. June differentials fell by 85 cents to a $14.65 a barrel discount to WTI.

Over one-fifth of the Lyondell refinery's roughly 210,000 bpd of imported crude came from Canada last year, up from less than 4 percent the year before, according to the U.S. Energy Information Administration.

Gulf Coast cash refined products markets largely shrugged off the fire. A2 CBOB gasoline differentials finished flat with Thursday's levels, while ultra-low sulfur diesel climbed 0.75 cent per gallon and stalled, traders and brokers said.

(Additional reporting by Liz Hampton and Kristen Hays in Houston; Nia Williams in Calgary; Jarrett Renshaw and Jonathan Leff in New York; Editing by Terry Wade, Fiona Ortiz and Diane Craft)