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Shell Shuts Down 310,000 Bpd Deer Park Refinery

Shell has shut down the crude distillation units of its Deer Park refinery due to a malfunction, Reuters has reported, citing unnamed sources familiar with the matter.

The two crude distillation units have a combined capacity of 310,000 barrels of oil daily. According to the Reuters sources, they were shut down after a seal failed on a pump that feeds crude to other units at the refinery.

Crude distillation units are where the first phase of the refining process takes place. In it, crude oil is fed into the refinery, where it is distilled into the various fractions that are then sent on to other units at the refinery for further processing.

Therefore, shutting down the crude distillation units effectively means shutting down most of the refinery.

Shell recently revealed plans to reduce its refining capacity by shutting down seven refineries and cutting diesel and gasoline production by 55 percent over the next ten years as part of its journey to a net-zero company by 2050.

One of the refineries to be closed is the facility in Convent, Louisiana. Its shutdown started at the end of 2020 after Shell failed to find a buyer for the facility amid the slump in oil and fuel demand caused by the pandemic and excess supply of crude. The Convent facility had a capacity of 240,000 barrels of crude oil daily and was capable of producing 115,000 bpd of gasoline, 31,000 bpd of jet fuel, and 77,000 bpd of low-sulfur diesel.

Shell is not the only one closing refineries in the United States. Other processing facilities are being converted into biofuels plants or mothballed under pressure from market conditions. Fuel demand has not been improving from the pandemic blow as fast as refiners need it to improve, and the green transition movement is clouding the outlook for long-term demand for fuels, forcing refiners to adjust their plans.

By Charles Kennedy for Oilprice.com

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