BP's Whiting refinery overhaul hits delays, lawsuit

Fri Dec 14, 2012 3:05pm EST
 
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(Reuters) - A $4 billion project to upgrade BP Plc's BP.L 337,000 barrel per day (bpd) Whiting, Indiana, refinery hit unexpected snags this month, including a more than one-month delay in restarting its biggest crude oil unit and a lawsuit against contractors.

BP has pushed back the start-up date of its revamped 260,000 bpd sour crude unit by 30 to 45 days until mid-April, industry intelligence group IIR Energy reported.

Specialty newswire Energy News Today also reported the delay, saying the unit would now be restarted in May instead of March.

Both reports also said that the postponed restart of the unit, which was shut in early November for an overhaul initially expected to take just three or four months, would also push back the commissioning of a new 120,000 bpd coker unit that is key to BP's plan to process more cheap, Canadian sour crude.

The delays will depress demand for Canadian crude in the mid-continent area, prolonging a supply glut and weighing heavily on benchmark U.S. crude as production from North Dakota and Canada expands more quickly than the new pipelines that are set to deliver it to Gulf Coast refiners.

Canada's benchmark heavy crude oil differentials tumbled this week to their lowest in five years, putting local prices at under $50 a barrel -- a point that could begin to force oil companies to consider paring investment or cutting back output.

"This is bearish for WTI," says Amrita Sen, chief oil analyst at Energy Aspects in London.

"It looks like the glut around Cushing is now going to last at least another quarter, which is no help at all for Canadian or inland producers in the United States, some of whom are already suffering from cash flow issues."

BP declined to comment on the timeline for individual units, but said the overall project at the Whiting refinery remained on track.   Continued...

 
BP logo is seen at a fuel station of British oil company BP in St. Petersburg, October 18, 2012. REUTERS/Alexander Demianchuk