Motiva Convent refinery fire out, HCU heavily damaged -sources

August 11, 2016 3:15 PM EDT

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By Erwin Seba and Liz Hampton

HOUSTON (Reuters) - A blaze broke out on Thursday at Motiva Enterprises [MOTIV.UL] 235,000 barrel per day (bpd) Convent, Louisiana refinery, heavily damaging the structure of the heavy oil hydrocracker before being extinguished in the afternoon, sources familiar with plant operations said.

Motiva confirmed that the fire was extinguished and said there were no injuries.

Initial assessments by Motiva indicated that repairs to 45,000 bpd HCU, called the H-Oil unit, are expected to take between one and four months, the sources said. Little damage was seen to the unit's reactors, they said.

The fire appears to have begun at about 10:50 a.m. CDT (1550 GMT) when a pipe ruptured on the hydrocracker, which uses hydrogen under high pressure to make diesel and gasoline, according to the sources.

The reactors are where hydrogen and gas oil mix in the hydrocracker. Damage to the reactors could mean the unit would be unable to make motor fuels.

One of the sources said the reactors appeared to be in "decent shape."

Motiva had been planning to reconfigure the H-Oil unit to run a wider slate of feeds in a revamp scheduled for February 2017. No decision had been made yet about possibly doing the revamp while the unit is shut for structural repairs, the sources said.

The rest of the refinery, located 68 miles (109 kilometers) west of New Orleans, remained in operation during the blaze.

About 300 workers were evacuated from the refinery during the fire, the sources said.

Motiva said no injuries had been reported and all personnel had been accounted for. The company also confirmed the fire was on the H-Oil unit the rest of the refinery was operational.

A spokeswoman for the U.S. Chemical Safety Board said the agency was following up on the incident.

Highways and roads near the refinery were shut for a time, St. James Parish officials said, but then reopened.

U.S. oil product futures prices rallied, with ultra-low sulfur diesel futures gaining 4.8 percent on the day. Gasoline futures rose 4.4 percent on the day. The diesel crack spread, a measure of refiner margins, also rose, gaining more than 7 percent.

Mars Sour, the U.S. Gulf Coast medium sour benchmark delivered into Louisiana, fell by roughly 25 cents to 35 cents per barrel following news of the fire as traders weighed a potential cut to crude demand.

In addition to halting production of diesel from the refinery, the fire further disrupts an already delayed project by Motiva to combine the Convent refinery with the Motiva refinery in Norco, Louisiana, located 50 miles (80 km) away. Before the blaze, that plan had already been pushed back nine months for completion.

(Reporting by Erwin Seba and Liz Hampton in Houston; Jarrett Renshaw, Catherine Ngai and Jessica Resnick-Ault in New York; Editing by Alan Crosby and David Gregorio)

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