Bloomberg News

Four Killed in U.K.’s Deadliest Refinery Explosion Since 1974

June 03, 2011

(Run BMAP 80193<GO> to locate refinery.)

June 3 (Bloomberg) -- Four workers were killed when a storage tank exploded and caused a fire at Chevron Corp’s Pembroke plant in Wales yesterday, in the U.K.’s worst refinery disaster for almost four decades.

Another worker was hospitalized with serious injuries, San Ramon, California-based Chevron said in a statement. Output at the 210,000 barrel-a-day refinery wasn’t disrupted and an investigation is under way.

Yesterday’s explosion was the deadliest since 28 people were killed in a blast at a chemical plant at Flixborough in northern England in 1974, according to the U.K. Petroleum Industry Association Ltd. A fire in a crude distillation unit at Total SA’s 221,000 barrel-a-day Lindsey refinery in northeast England last year left one person dead.

The Pembroke refinery, which is in the process of being sold to Valero Energy Corp., processes crude from the North Sea, Russia and West Africa into diesel, gasoline and jet fuel. The storage tank that exploded contained no crude, minimizing the disruption to operations.

“There are no implications to supply of finished products,” Isabelle Guerin, a Chevron spokeswoman based in London, said by telephone.

Non-Essential Work

Chevron suspended non-essential work at the refinery and said U.S. experts would be sent over to help with the inquiry. Shipping at the nearby Milford Haven Port wasn’t affected, the port’s control room said.

“Chevron has indicated that product supply is unaffected,” said Harry Tchilinguirian, head of commodity- markets strategy at BNP Paribas in London. “Given the refinery remains fully operational, then we are unlikely to see a material reaction in oil product prices.”

European gasoline for immediate loading traded from $1,018 to $1,044 a metric ton today, according to a Bloomberg survey of traders and brokers active in the Amsterdam-Rotterdam-Antwerp area, Europe’s oil-trading hub. Chevron sold 1,000 tons of the fuel to Royal Dutch Shell Plc at $1,037 a ton, according to the survey. Deals were done yesterday from $1,020 to $1,068.

There will be no changes to worker shifts at the Pembroke plant today, said Paul Bray, another Chevron spokesman. “Staff will be there today on the shift patterns you’d expect,” said Bray. “A small number of non-essential staff aren’t coming in.”

Blown Offshore

The refinery continued to operate after the fire was extinguished, Guerin said yesterday. The workers that were killed were contractors, the company said.

Material released into the atmosphere as a result of the explosion and fire was blown offshore, representing no risk to the neighboring community, Dyfed Powys Police said in a statement on the force’s website. The Welsh environment agency will carry out an investigation into the incident with the U.K.’s health and safety executive, according to the statement.

“This news is utterly devastating,” Greg Hanggi, the refinery’s general manager, said in a statement. “We will take every step possible to determine the series of events that led to this tragic incident and ensure that any lessons learnt from it will be integrated into the business and shared with our industry partners.”

Forty-four percent of production at the refinery is gasoline and 40 percent is distillates, a group of fuels including diesel and jet fuel, according to Valero in March. About half of the refinery’s output is exported, including to the U.S. east coast, said Ruth Kent, a London-based spokeswoman for Chevron.

Tank Farms

The refinery has more than 140 storage tanks in six so- called tank farms, according to a company brochure. Crude oil from the nearby port can be pumped at as much as 100,000 barrels an hour through pipelines to one of the plant’s storage tanks. The Pembroke plant was previously owned by Texaco Inc., which was acquired by Chevron in 2001.

In September 2003, a fire erupted at a steam plant at the refinery and one person had to be taken to hospital. In March of the same year, fluid from a pipe leak caught fire, resulting in the shutdown of a gasoline-producing fluid catalytic cracking unit. A June 2001 fire in the unifier process unit at the plant, which makes naphtha, sent flames soaring hundreds of feet into the air,

Valero, the largest U.S. crude refiner, agreed in March to buy the Pembroke refinery and 1,000 retail outlets from Chevron for about $1.73 billion in cash, to gain its first European plant.

Pembroke’s cash operating costs are about $1 a barrel less than Valero’s existing plants, making it competitive with other refineries that supply gasoline to the U.S. Atlantic Coast, Valero said at the time. Chevron had been seeking a buyer for its only European refinery for almost a year to reduce its exposure to the industry.

Bill Day, a spokesman for Valero, said he couldn’t comment on operations at Pembroke because the company’s purchase of the plant has not yet closed. The acquisition is expected to close Sept. 30, according to Bloomberg data.

--With assistance from Eduard Gismatullin in London, Aaron Clark in New York, Bradley Olson in Houston and Lynn Doan in San Francisco. Editors: Stephen Cunningham, Alex Devine.

To contact the reporters on this story: Rachel Graham in London rgraham13@bloomberg.net Nidaa Bakhsh in London at nbakhsh@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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