Shell may permanently shut Louisiana refinery next week - sources

By Erwin Seba
·2-min read
An employee controls the sorting of Shell branded Tri-Sure tab-seal barrel caps ahead of fitting to oil drums at Royal Dutch Shell Plc's lubricants blending plant in the town of Torzhok

By Erwin Seba

HOUSTON (Reuters) - Royal Dutch Shell PLC may begin the permanent shutdown of its 211,146 barrel-per-day Convent, Louisiana, refinery early next week, people familiar with plant operations said on Monday.

Shell announced on Nov. 5 the refinery, located 57 miles (92 km) west of New Orleans, was to close after the company failed to find a buyer amid the COVID-19 pandemic.

A Shell spokesman did not reply to a request for comment.

The Convent refinery is first U.S. Gulf Coast refinery to permanently close because of the pandemic-related decline in demand for refined products. Eight other North American plants have been idled or targeted for shutdowns.

The coronavirus pandemic cut fuel demand by up to 30% earlier this year, and even as economies recover the outbreak will likely reduce global demand by 4.7 million barrels per day (bpd) over the next five years, analysts have said.

Three U.S. oil refineries have shut already this year because of weak demand for jet fuel, diesel and gasoline amid a slowing economy.

In August, Calcasieu Refining idled its 135,500-bpd Lake Charles, Louisiana, facility, citing weak margins from falling demand. Marathon Petroleum Corp has said it will not restart production at its refineries in Martinez, California, and Gallup, New Mexico.

Shell this month said it will halve its crude processing capacity at its 500,000 bpd Pulau Bukom plant in Singapore over the next three years. Plants in the U.S. and Europe are considering converting some facilities to produce biofuels.

U.S. refineries in August ran at 78.8% of their 18.6 million barrels per day (bpd) capacity, according to the U.S. Energy Information Administration, down from 83.1% in March.

(Reporting by Erwin Seba; Editing by Chris Reese and Kenneth Maxwell)