Shutdowns and Turnarounds in the Oil and Gas Industry

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Oil & Gas IQ
09/06/2014

Refinery Turnaround

Effective planning and execution of shutdowns and turnarounds is essential to maintain product levels and reduce loss of revenue for the oil and gas industry, particularly if improper maintenance leads to an unplanned shutdown.

The effects of unplanned shutdowns or changes to schedules can have a profound impact not only on the company operating the facility but also on the wider economy.

Figures from the UK Office for National Statistics show that the fall in industrial production that was experienced in the country in June 2010 was in part due to shutdowns within the oil and gas industry. Oil and gas production in the UK contributes £8 billion a year to the Exchequer and has been the largest sector of industrial development for four decades.

The 0.5 percent dip was seen as a surprise setback by analysts and was due in part to a 6 percent drop in oil and gas extraction. This was caused by planned shutdowns for maintenance taking place in June rather than August.

Planning an Efficient Oil Refinery Turnaround

Major players within the oil and gas industry know the importance of significant levels of planning in executing oil and gas maintenance work like a oil refinery turnaround and plant turnaround.

Shell has announced the successful completion of a number of turnarounds in the past few months. Planning for the successful turnaround at the Athabasca Oil Sands Project, completed in June, had been underway since 2007 and the maintenance work was completed within the two-month timeframe and within budget.

READ MORE: Four Ways To Turnaround Your Approach to Shutdowns

Some 4,500 contractors were involved in the second major turnaround at the Muskeg River Mine and Scotford Upgrader, which Shell is a 60 percent owner of. During the shutdown, more than 250 new valves were installed and work began on a pipeline which will facilitate a 100,000 barrel a day expansion project.

The company also recently completed the first successful turnaround of its Nanhai petrochemicals plant in China in August.

Working with its partner, China National Offshore Oil Company, the company was able to perform the turnaround ahead of time and budget. Debottlenecking of various processing units was timed to coincide with the shutdown to increase capacity at the plant.

READ MORE: Monitoring And Management: How To Pre-Empt The Downtime

Ben van Beurden, executive vice president of Shell, said: "The decision to increase capacity at Nanhai supports the Shell strategy to grow selectively and to continue to remain a leader in the expanding Asian petrochemicals market."

Reports from Bloomberg suggest that Saudi Aramco and ExxonMobil are already planning a maintenance shutdown, which may last 45 days, at the Yanbu refinery for February 2013.

Consequences of Unplanned Shutdowns

The economic impact from a number of unplanned shutdowns can be severe for oil and gas companies.

Indonesia saw a reduction in its crude oil sales during the first half of the year, caused in part by 122 unplanned shutdowns from the operator BPMigas, which created 6,860 bpd in lost production, the Jakarta Post reported.

BPMigas chairman R Priyono said that companies had not been paying proper attention to maintenance previously due to a lack of clarity on government policy, but this was set to change this year and decrease the number of unplanned shutdowns.

"Last year oil and gas contractors did not really pay attention on maintenance as they were still unclear about the cost recovery payment. But now the government has said the payment would not be capped, creating certainty for the contractors," Priyono is quoted by the news provider as saying.

Unplanned shutdowns also potentially put pressure on resources when the plant became operational.

An unplanned shutdown at the North Refineries Company's Baiji oil refinery in early August due to a mechanical fault means the company has now been required to significantly increase production.

READ MORE: Guide to Shutdowns and Turnarounds

Reuters reports that the refinery, which usually operates at 70 percent capacity, has been forced to boost production to 80 percent capacity to compensate for the loss in revenue.