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HOUSTON (Reuters) - The biggest U.S. oil refinery could shut its main crude distillation unit for up to three months next year to replace a vibrating pipe, sources familiar with operations said, in what would be another blow to the troubled $10 billion plant.
The 600,000 barrel-per-day (bpd) refinery in Port Arthur, Texas, has sustained a series of setbacks since Motiva Enterprise MOTIV.UL opened it last year. The setbacks include two fires last week that shut three parts of the plant.
The Fall of 2014 is likely the earliest the work could be done on the 16-inch pipe, which moves crude in the refinery's main unit, the VPS-5. Excessive vibration on the pipe prevents the 325,000 bpd unit from running at capacity, according to the sources.
The pending work means the refinery would be without its main unit just as markets seek to build up inventories of distillate ahead of winter.
"In keeping with our disclosure policy, we cannot provide detail on the timing of maintenance at specific units, or how long it will take to complete maintenance activities," a Shell official said.
Motiva is owned by Royal Dutch Shell (RDSa.L) and Saudi Aramco SDABO.UL.
The VPS-5 has only reached its rated capacity one time and rarely run above 300,000 bpd. Most often it runs between 250,000 and 280,000 bpd and rates are not expected to go beyond that until the pipe is replaced, sources said.
Plans to boost the main crude unit's capacity by 20 percent through efficiency improvements were scrapped in March because of the vibrating pipe.
Vibration can cause leaks on the pipe, which had already been replaced once.
"It will have to be a larger pipe," said one of the sources.
"It will be a fix of the fix they made after the caustic leak," said the source, referring to repairs following a chemical leak in mid-2012.
Last year, Motiva shut the main unit, the centerpiece of a massive expansion that made it the biggest U.S. plant, for seven and a half months of work after a spill of caustic sodium hydroxide into the system pitted and cracked thousands of feet of stainless steel pipe.
It has been down for nearly half of the 16 months since it first started up in late April 2012.
Meanwhile, the fires this month, which affected a hydrocracker and a sulfur recovery unit, will take at least two weeks to recover from, sources said. One of the fires prompted the idling of the VPS-5 unit but did not damage it.
Motiva has also reported a pump fire in a process unit at its 235,000 barrels-per-day (bpd) refinery in nearby Convent, Louisiana, according to a regulatory filing.
The U.S. Gulf Coast is so well supplied with motor fuels that wholesale gasoline and diesel prices in the region moved only modestly on Motiva's latest woes.
Inventories are close to their highest levels in two decades in the region, which has close to half of all U.S. refining capacity, as other refiners run nearly full bore to reap profits from exports that make up for softer U.S. demand.
While Motiva has struggled, some refiners have added capacity in the export-heavy region.
More pointedly, the market has grown accustomed to repeated problems at Motiva's Texas plant.
"Maybe it was cursed," a veteran Gulf Coast products trader said on Tuesday of the market's muted reaction to Motiva's struggles. "I think people are not surprised by problems there."
This week as Reuters reported the Port Arthur outages, wholesale gasoline prices relative to September RBOB futures on the New York Mercantile Exchange showed little reaction, rising as much or more on routine changes such as cycles scheduling to move on a pipeline than the Motiva issues, traders said.
"Certainly it is important," Mark Routt, a senior energy consultant at KBC in Houston, said of Motiva. "But it has been in this non-fully functioning condition for some time now."
Refinery issues in other U.S. regions can prompt double-digit moves in price differentials because fewer plants serve those markets. But the Gulf market is different.
"The Gulf Coast is a much bigger market and refineries have more flexibility to ramp up a little bit. There's room for unscheduled incidents like this," said John Auers, senior vice president at Turner, Mason & Co in Dallas.
Additional reporting by Kristen Hays; Editing by Terry Wade and Bob Burgdorfer