Shell’s Louisiana Refining Facility To Be Shuttered For Overhaul

Oil major Royal Dutch Shell has indicated that its refinery located in Convent, Louisiana and which produces more than 200,000 barrels per day will be shut down to allow for an overhaul of the facility. According to sources an alkylation unit with a capacity of 16,500 barrels per day will be shut down for a period of six weeks as well as a unit dedicated to fluid catalytic cracking and which produces about 92,000 barrels per day of gasoline.

Last year in November Shell had announced that the FCCU would remain operational for a period of between four and five years. A previous owner of the facility, Motiva Enterprises, had earlier planned to shutter the unit because it was unprofitable. Motiva was co-owned by Saudi Aramco and Shell until last year in May when the two oil giants divided the assets of the partnership. Royal Dutch Shell took possession of the refinery in Convent as well as another refinery located in Norco, Louisiana.

Gasoline for export

The Anglo-Dutch oil major had also planned to shutter the FCCU facility in order to merge the two refineries in the state of Louisiana into one plant that would be connected by a pipeline. According to sources Shell has also put those plans aside for a period of half a decade. Shell intends to use the FCCU facility to refine gasoline meant for export to United States’ neighbor to the South, Mexico.

This comes less than a week since Royal Dutch Shell said it will expand its deepwater output as well as return a profit from shale production in the years to come since both strategies will assist the oil giant to cope with low crude prices. Though the firm’s deepwater production in Gulf of Mexico, Nigeria and Brazil is bigger in capacity and more profitable, Shell sees its engine of growth being onshore shale of the United States.

Shale production

“We can see strong (shale) production growth, strong cash surpluses that gives us a balance in our portfolio where you can ramp investment up and down, you can moderate that, very unlike deepwater which is quite chunky,” said Shell’s gas and oil production head, Andy Brown.

According to Brown the smaller shale fields and the mammoth deepwater projects are competing for capital and are likely to generate profits even when the price of oil is $40 per barrel. Shell plans to break even with regards to its shale activities in New Mexico and Texas’ Permian basin by 2019.

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