http://www.reuters.com/article/idUSSIN179529
Fire hits Singapore Exxon refinery, crude unit shut
Thu May 3, 2007 7:23am EDT
Stocks
Exxon Mobil Corporation
XOM.N
$61.24
+1.94+3.27%
12:00am GMT+0800
(Adds market impact more Exxon and government comments)
By Yaw Yan Chong
SINGAPORE, May 3 (Reuters) - Exxon Mobil Corp. (XOM.N) has shut a 115,000 barrels per day (bpd) crude oil unit at its refinery offshore Singapore indefinitely, after a fire in an associated unit killed two workers on Thursday, the company said.
A larger 185,000-bpd crude distillation unit (CDU) at the 300,000-bpd refinery on Jurong Island continues to operate normally, the company said, without giving further details. The CDU is at the heart of the refining process.
The smaller unit will "not be started up until it is safe to do so", the U.S. oil giant said in a statement, giving no timeframe for a resumption in operation.
A brief flash fire broke out in a cooling unit, called an exchanger, that was undergoing maintenance. The CDU was operating at the time of the accident, said an Exxon Mobil spokeswoman.
Singapore authorities said they had ordered the company to halt some types of refining processes pending an investigation, but it was not clear how this would affect core operations.
Most Asian oil product prices strengthened at market close despite weaker crude benchmarks, following news of the outage.
The price difference of fuel oil to Dubai crude, for example, jumped to a three-month high of $9.45 a barrel in discount. The benchmark 95-octane gasoline grade rose to a premium of $12.92 a barrel to Singapore spot quotes, up 90 cents from day-ago levels, and diesel prices closed at $80.60, up 15 cents. An industry source familiar with operations at the Pulau Ayer Chawan refinery, half of Exxon's Singapore refining complex, had said earlier the CDU had been shut as a precautionary move after the fire, which did not appear to have damaged the unit. The source had also initially said that the CDU had restarted.
Exxon spokeswoman Eva Ho said all other secondary units around the affected CDU are operating normally.
Traders said they were still waiting to get more information before reacting and that there had been no reported delays to loadings from Exxon's terminal.
"If they have to shut down the units for a long period, it will affect the gasoline market, as regional supplies are tight and demand from the United States is also strong," said Hwang Gyu-won, analyst at Tong Yang Investment Bank.
The fire occurred at an "overhead exchanger of a distillation column" early on Thursday, the Singapore Civil Defence Force (SCDF) said. It affected an area of 1.5 metres (5 ft) by 4.0 metres and was brought under control within half an hour, the SCDF said.
The industry source said the unit cools oil that comes out of the core CDUs and was being restarted after maintenance. Some exchangers are also used to pre-heat feedstock for crude units.
STOP-WORK ORDER
The 36-year-old plant, which processes mainly sour Middle East crude and sweet Asia Pacific grades, produces almost enough fuel to meet the total demand of Vietnam. It is one-half of Exxon Singapore's 605,000-bpd complex, the fourth-largest in Asia and particularly important as it exports fuel across the region.
Even without CDU damage, oil traders feared a potentially extended closure at the plant as Singapore authorities investigate the deaths.
The Singapore Ministry of Manpower has issued a partial stop-work order relating to all blinding work at the plant, which could be in place for weeks or months, a ministry spokeswoman said.
"The order will be in place until we determine that it is safe for them to resume work," she told Reuters, adding that the CDU would not be affected by the order if no blinding works are carried out in the unit.
Blinding work prevents oil from flowing into the cooling exchangers during maintenance, but it was not immediately clear whether the CDU would be shut over the entire duration. Exxon spokeswoman Ho declined to comment on whether the stop-work order applied to the CDU.
In Japan, refiners must shut for at least a week in the event of a fatality.
Ho said Exxon would continue to meet customer demand. Oil companies are often able to maintain supply lines by drawing down inventories or buying additional fuel from other parties.
Two contract workers were killed in the fire and two were injured, Exxon Mobil said in its statement.
Police said the two workers who were killed were Singaporeans. The injured workers, who are from Bangladesh and India, are in intensive care for burns.
The Exxon statement also clarified that the affected CDU has a 115,000-bpd capacity, not 140,000 bpd as stated by an industry source earlier. (Additional reporting by Jonathan Leff, Maryelle Demongeot, Luke Pachymuthu, Jiwon Chung, Geert De Clercq and Jamie Lee)
