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Layoffs avoided as Shell to revamp gasoline unit at Convent refinery

CONVENT — Royal Dutch Shell plans to refurbish the gasoline-producing catalytic cracking unit at its Convent oil refinery in St. James Parish next year and not demolish it as previously planned under an effort to link up the oil major’s Gulf Coast operations, a local government official said.

St. James Parish President Timmy Roussel announced Wednesday night that refinery managers told him the fluidized catalytic cracker would be furbished in a forthcoming “major turnaround” so it could be run for another four to five years, avoiding possible layoffs at the 227,600 barrel-per-day refinery.

Roussel told the Parish Council on Wednesday that he was informed the cracker was previously to be taken out of service and demolished with the completion of a pipeline system being built between Shell’s Convent and Norco refineries along the Mississippi River.

“The announcement will be forthcoming that the company decided to invest in a major turnaround for that cracker for another cycle,” Roussel said of an expected formal statement from Shell. “This is positive news as we look at it because it was always believed that layoffs would have taken place following that demolition.”

Roussel said later that he was told a “cycle” is four to five years.

The Convent Refinery, which has separately suffered at least three fires and related operational disruptions since last August, is a major employer and taxpayer in the rural parish between Baton Rouge and New Orleans.

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The announcement is a shift for the major oil company as anonymous sources told Reuters in late July that Shell would permanently shut the 92,000-barrel-per-day fluidized catalytic cracker unit in Convent because it was unprofitable. The shutdown was supposed to start in January.

Fluidized catalytic cracker, like Shell’s, uses heat and a catalyst to create gasoline and other distillates.

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When told of Roussel’s comments in the public meeting Wednesday night, Shell spokesman Ray Fisher confirmed the planned refurbishment of the cracking unit but added that the refinery’s gasoline hydrodesulphurization unit, known as HDS-1, will also be refurbished in 2018.

“This decision leverages Shell’s end-to-end business integration on the U.S. Gulf Coast and reinforces the strategic value of the Convent Refinery,” Fisher said.

As Roussel mentioned before the council, Fisher added that the revamped HDS-1 and cracking units would be run for another cycle.

In 2015, then-refinery owner Motiva Enterprises announced a $500 million plan to build three pipelines connecting the Convent and Norco refineries and linking an existing Mississippi River oil terminal in St. James to Norco.

Motiva, which was a joint partnership between Shell and Saudi Aramco, added then that once the pipelines were completed, the 50-50 partnership had plans only to “idle” the fluidized catalytic cracker at the Convent refinery and reconfigure the hydrocracker unit at Norco to process 30,000 barrels per day of additional gas oil into high-quality diesel.

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In May, Shell took sole ownership of the refineries in Norco and Convent under an agreement with Saudi Aramco to split up the assets of the Motiva joint venture.

In July, sources told Reuters that Shell’s plans linking the Convent and Norco refinery would instead result in decommissioning the Convent refinery’s cracking unit as gas oil once used to make gasoline in Convent would be sent to the Norco refinery.

FOLLOW DAVID J. MITCHELL ON TWITTER, @NEWSIEDAVE.

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