https://finance.yahoo.com/news/fire-massive-exxon-refinery-poses-171207688.html
(Bloomberg)
-- A fire broke out early Wednesday at Exxon Mobil Corp.’s Baton Rouge
oil refinery in Louisiana, halting production at the fifth-biggest
fuel-making plant in the U.S.
The
outage at the massive complex -- which supplies fuels across the
southeast U.S. and all the way to New York Harbor -- means the refinery
needs fewer barrels of crude oil, depressing a market already reeling
from the coronavirus crisis in China. But it could help ease a gasoline
glut in the Gulf Coast, where stockpiles hit a record in late January.
The
Baton Rouge fire is the third blaze in the Gulf Coast region for Exxon
in less than a year, and comes after the company posted the worst
quarterly profit in almost four years. Earnings at its refining and
chemical business slumped by a combined $6.5 billion in 2019, and the
oil giant is pursuing asset sales and even cracking down on employee
travel to tide over the turmoil.
Heavy
Canadian oil fell from a four-month high after the Baton Rouge refinery
shutdown, while Gulf Coast and New York gasoline strengthened.
Consumers could feel the impact of higher prices as soon as Thursday
morning.
The
latest blaze erupted in a natural gas line, affecting first one and
then all of the facility’s crude distillation towers -- which heat and
break down raw oil into products -- according to people familiar with
operations. As a result, other units such as the catalytic cracker and
the chemical plant had to cease operations.
The
fire has been extinguished and there were no injuries, according to
Exxon. Operations continue at the refinery and chemical plant, spokesman
Jeremy Eikenberry said. The facility is located along the Mississippi
River about 80 miles (129 kilometers) northwest of New Orleans, can
process more than 500,000 barrels of crude a day and accounts for about
15% of Louisiana’s refining capacity.
The
local WAFB TV station’s website showed images of the fire, and said
local people reported their houses being shaken by the incident. There
was no initial off-site impact to air quality, or an immediate call for
an evacuation of the nearby area, WAFB said.
The
complex’s chemical plant has shut, including its olefins unit -- which
takes feedstocks such as naphtha, butane, propane and ethane from the
oil refinery and converts them into ethylene and propylene that are used
to make plastics.
Western
Canadian Select crude’s discount to U.S. West Texas Intermediate
widened to $16.75 a barrel on Wednesday. The Baton Rouge refinery uses
heavy crude produced in the Kearl oil sands mine operated by Imperial
Oil Ltd., which is majority owned by Exxon.
Gasoline
in the Gulf Coast spot market rose 1.25 cent per gallon to an 8-cent
discount to Nymex Rbob futures Wednesday afternoon. Futures of the motor
fuel jumped the most in almost five months.
Exxon
is in the process of a massive expansion of the plastic-ingredient
capacity on the chemical side of the Baton Rouge complex that’s
scheduled to begin output next year. The combined refining and chemical
operations account for one in every 10 jobs in southwest Louisiana
region, according to the company.
U.S.
refineries handled an average of about 16.5 million barrels a day of
crude so far this year, Energy Information Administration data show.
(Updates with background in third paragraph and market reaction in fourth.)
--With assistance from Joe Carroll, Bill Lehane and Robert Tuttle.
To
contact the reporters on this story: Barbara Powell in Houston at
bpowell4@bloomberg.net;Jeffrey Bair in Houston at
jbair4@bloomberg.net;Rachel Graham in London at rgraham13@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Pratish Narayanan, Joe Carroll
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