PDVSA Fire, 48 Dead

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A blaze at Venezuela’s largest refinery spread to a third storage tank as firefighters try to contain flames burning since an Aug. 25 gas explosion killed at least 48 people. Gasoline prices rallied in New York.

Oil Minister Rafael Ramirez said two of the fires at tanks holding naphtha at the Amuay refinery probably will burn out by tomorrow as firefighters contend with a third fire that started at 2:15 p.m. local time today. There was no structural damage to the processing units at the facility about 240 miles west of Caracas, he said, adding that exports haven’t been unaffected.

“We have to announce that a third tank which has had flames on its roof is also catching fire at this moment,” Ramirez, who is also head of state oil company Petroleos de Venezuela SA, said on state television. “We estimate that with the wind and conditions the two tanks should extinguish themselves by tomorrow, with this new tank we’re obliged to continue putting in all the effort to extinguish the fire.”

President Hugo Chavez, who faces elections in October, declared three days of mourning and toured the affected areas. The explosion occurred after a gas cloud formed and erupted into a ball of flames that engulfed a National Guard post as well as homes and shops in front of the refining complex. The shutdown threatens refined product supply as U.S. Gulf Coast plants halt operations as Tropical Storm Isaac heads toward the region.

Chavez said he ordered an investigation into the causes and said they won’t discard any hypotheses.

Venezuela has 4 million barrels of inventories of gasoline and other petroleum products and continues to produce 735,000 barrels of gasoline a day at plants, including nearby Cardon, according to Ramirez. Amuay, which has capacity to produce 645,000 barrels a day, will be restarted within two days after all of the fires have been extinguished, he said.

PDVSA, as the Caracas-based company is known, has 10 days of inventory to meet its supply obligations internally and externally, Ramirez said. The state-owned company shipped five tankers of crude oil from Paraguana yesterday, he said.

“It’s probably going to be far longer than their public statements given the track record we’ve seen of maintenance at PDVSA facilities over the last couple of years,” Andy Lipow, president of Houston-based Lipow Oil Associates LLC, said by phone. “I think it concerns the market that it could take a long time given that it’s their largest refining complex.”

PDVSA is the sole owner and operator of the refinery. The blast is among the world’s deadliest at an oil refinery. Fifteen workers were killed at BP Plc (BP/)’s Texas City refinery in 2005, while more than 50 people died in a fire at Hindustan Petroleum Corp.’s refinery in Visakhapatnam, India, in 1997.

Amuay, Cardon and Bajo Grande form the Paraguana complex, which has a capacity of about 950,000 barrels a day. That’s second in size to Reliance Industries Ltd. (RIL)’s Jamnagar refinery in India, according to data compiled by Bloomberg. CRP, as the complex is known, supplies 67 percent of gasoline to the local market, according to PDVSA’s website. Cardon and Amuay also export refined products to the Caribbean and the U.S.

Stella Lugo, governor of Falcon state in western Venezuela, described the early-morning blast as similar to an earthquake and said more than 200 homes near the refinery were damaged. Lugo told Union Radio today that the death toll had risen to 48 from a previous estimate of 39.

The National Guard stationed at the refinery bore the brunt of the deaths, including 18 troops and 15 family members, according to Vice President Elias Jaua. More than 500 homes in vicinity of the plant have been damaged, Chavez said today.

Gasoline rose to the highest level in almost four months today as some refineries shut with the approach of Isaac and the disruption at Amuay. BP and other companies have suspended some crude and gas operations in the Gulf of Mexico. The area is home to 23 percent of U.S. oil production and 44 percent of refining capacity, according to the U.S. Energy Department.

Gasoline for September delivery advanced 7.68 cents to $3.1548 a gallon on the New York Mercantile Exchange, the highest settlement since April 30.

Refiners with Texas operations that are less exposed to Isaac stand to benefit by exporting more product after the Venezuela explosion, said John Auers, senior vice president at Turner Mason & Company, a Dallas-based energy consultant.

“On a sustainable basis, Venezuela hasn’t been able to produce much product as they used to,” Auers said by telephone. “The U.S. refiners have taken their place. Now in a short term, they certainly can step up and do even more.”

Shares in Valero Energy Corp., based in San Antonio, Texas, jumped 5.2 percent to $30.77 today, while Marathon Petroleum Corp., based in Findlay, Ohio, gained 1.7 percent to $49.60.

The fire at Amuay, which opened in 1950, highlights the risk to supplies of oil products from large, aging plants and may lead to more exports from Asia to the U.S., according to Goldman Sachs Group Inc.

Other major refinery fires elsewhere caused months of delays before full operations resumed, Nilesh Banerjee, an analyst at Goldman in Mumbai, said in a note e-mailed today.

Venezuela, one of the 12 members of the Organization of Petroleum Exporting Countries and South America’s biggest crude producer, had an average output of 2.7 million barrels of oil a day last year, according to BP statistics. Its main export markets are the U.S. and China.

Venezuela was the fourth-largest source of crude for the U.S. in May, after Canada, Saudi Arabia and Mexico, at 821,000 barrels a day, based on data from the U.S. Energy Information Agency. Venezuelan product imports from the U.S. nearly doubled in the first five months of 2012 to 38,000 barrels a day from 23,000 in the year earlier period, according to the EIA. They include gasoline, fuel additives and liquefied petroleum gas.

Cardon has closed units several times this year after incidents. PDVSA had to halt production and evacuate workers from its Petropiar heavy-crude upgrader last year after a gas leak and a fire.

Jose Bodas, an oil union leader, told Globovision on Aug. 25 that PDVSA has ignored calls by workers to improve “hazardous” working conditions at refineries.

Seven out of nine planned maintenance programs for the Amuay refinery were postponed last year because of a lack of materials, according to PDVSA’s 2011 annual report.

Ramirez denied that PDVSA has failed to invest in maintenance and said the company spent $6 billion in the past five years on its refining circuit. Chavez also denied reports that the leak of gas had begun hours before the explosion.

“Today’s price action probably already discounts refinery outages of a few days duration,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said in an e-mailed response to questions. “If refineries are in restart mode by the end of the week we could see the futures market rebalance. If the outages are extended beyond the next few days, then we’d look for more gains for gasoline and more weakness in crude.”

Gas Turbine Fire Japan

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Japan’s top oil refiner JX Nippon Oil & Energy said one of the three gas-fired power generating units at its 145,000 barrels per day (bpd) Sendai refinery caught fire late on Sunday, but there has been no impact on refining operations.

The fire at the No.3 gas-turbine unit, with a capacity of about 34 megawatts, had been extinguished by early Monday and there were no injuries, in large part due to successful usage of an automatic fire suppression system, a company official said.

More information on the plant:
Location: Miyagi
Operator: Nippon Petroleum Refining Co Ltd
Configuration: 102-MW, 2+1 CCGT with H-25 gas turbines CHP
Fuel: petrochem off-gas
Operation: 2007
HRSG supplier: MHI
T/G supplier: Hitachi, MHI, Melco
EPC: MHI

Quick facts: This CHP plant was commissioned on 20 Sep 2007 as part of a project undertaken by NPRC to upgrade facilities at its Sendai Refinery. The primary fuel is gas created as a by-product of the increased production of propylene and xylene. Surplus power is exported to the grid. This is the world’s first CCGT of its kind with two fully-fired boilers and the ability to use other gas fuels depending on the refinery’s gas balance. The plant has SCR.

2nd SeaRose FPSO Fire

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A fire was extinguished Tuesday evening aboard a platform working in the offshore oil industry off Newfoundland, although no one was injured and damages were limited.

The fire broke out in a pump room aboard the SeaRose floating platform at the White Rose field after 5 p.m., about 350 kilometres east of St. John’s.

Husky Energy said the vessel’s fire response teams put it out, and that “the incident was contained to the firewater pump room.”

The SeaRose is currently not in production. The vessel had recently returned to White Rose, the third oil field to go into production on the Grand Banks, following maintenance work in Northern Ireland.

Husky said the company is investigating how the fire started.

It’s the second fire in the last few months on the FPSO. In May, a small fire broke out in a generator. No one was injured in that incident, either.

Major ONGC Discovery

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ONGC reports a major new oil discovery offshore western India.

The company found the new reserves during development drilling on the D1 field, which it now believes may be the third largest field in the Western Offshore basin after Mumbai High and Heera.

Previously, D1 was known to have initial oil in-place of about 600 MMbbl. The latest result suggests more than 1 Bbbl. D1 is primarily an oil-producing field, about 200 km (124 mi) west of Mumbai, in a water depth of 85-90 m (279-295 ft). It extends over four blocks, D1-4, D1-12, D1-14, and D1-2/5.

The first well in D1-4 was drilled in 1976. However, the low gas-to-oil ratio and limited understanding of the reservoir at the time slowed the pace of exploration and appraisal.
First development of the D1 field was confined to the D1-4 block where a total of 12 wells were drilled in two phases. After Phase-II was completed, oil production peaked at 17,500 b/d in 2009, and currently averages 12,500 b/d.

ONGC is implementing an integrated development plan for D1. Three new wellhead platforms – D1-B, D1-C, and D1-D – have been commissioned for the D1-4, D1-12, and D1-14 blocks. Development drilling is under way in blocks D1-4 and D1-14, and is expected to increase production to 36,000 b/d by February 2013.

The first development well (D1-D#1) in block D1-14, which spudded in May was planned to be drilled to 2,648 m (8,687 ft). However, when oil was detected in the 2,635-2,640 m (8,645-8,661 ft) zone, drilling was extended 100 m (328 ft) further, with the entire deepened section encountering oil-bearing sand. The well was subsequently drilled to a depth of 2,830 m (9,284 ft).

ONGC says this discovery has uncovered an additional oil-bearing zone of about 142 m (466 ft). On completion of the D1 field development, production is expected to rise to 60,000 b/d.

ONGC’s Sudhir Vasudeva said: “This discovery indeed has come up with a lot of promise signifying a substantial increase in the production for the company. Finally, we have made it to a large discovery which eluded us so long.”

Another ONGC exploratory well in Mumbai Offshore block WOFF 123 has flowed 43° API oil at 280 b/d and gas at 114,447 cm/d (4 MMcf/d), underlining the potential of the basal clastic /basement play.

CoGen Gas Turbine Fire NJ

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An explosion on August 2nd inside the Co-Generation Plant at the International Matex Tank Terminal in Bayonne led to an one-alarm fire inside the facility, an official said.

Around 8:20 a.m., firefighters responded to a reported turbine fire at the plant, and upon arrival discovered heavy smoke coming from a building at the plant, said Bayonne Fire Chief Gregory Rogers.

The plant manager reported that an explosion was heard, said Rogers, and that control room gauges indicated a turbine caught fire.

The fire was confined to the turbine load gear compartment and was extinguished by a built in carbon dioxide compression system, said Rogers.

Firefighters worked to cool down the turbine and extinguished any remaining flames that were fueled by residual lubricating oil, said Rogers.

The fire was declared under control around 9 a.m., there were no reported injuries, said Rogers.

A preliminary investigation indicates a malfunction in the turbine as the cause of the fire, said Rogers.

The plant supervisor confirmed that the power at the facility was turned off prior to extinguishing efforts, said Rogers, and reported that an estimated five gallons of lubricant oil escaped the turbine but were contained.

Bayonne Police was on the scene, the Department of Environmental Protection and the Hudson Regional Health Commission were noticed of the incident.