(Newswire.net — August 19, 2017) — A Royal Dutch Shell refinery, based in Pernis in Rotterdam, has been shut down due to a fire at the facility’s electricity station. The refinery has been closed for several days and could remain closed for several weeks. Unfortunately, UK oil prices could suffer as a result.
A Devastating Fire
The fire started sometime in the night between Saturday, July 29 and Sunday, July 30. Firefighters responded early on Sunday morning and extinguished the blaze before dawn. Rumors are flying that the fire started because of a short circuit, although the company has not confirmed this. They want to “wait to know more about the circumstances of the incident” before making a statement.
The problem didn’t end once the fire was put out, however. On Monday, July 31, a hydrogen fluoride leak was reported during some of the cleanup. Hydrogen fluoride is a colorless, highly reactive gas that’s dangerous if inhaled. The cleanup crew quickly found the source of the leak and stopped it, but it indicated that the damage could be more extensive than they originally expected.
As a direct result, they were required to shut down the entire refinery to find the source of the fire, make repairs, and take precautionary measures against future problems.
The Largest European Refinery Shuts Down
The refinery is huge, the largest in Europe. The covered area is equivalent to 800 football fields. The pipes run up and down, end to end, and if laid out straight, they would circle the earth four times.
The pumps needed to run this refinery are extensive, and engineers expect weeks of labor to check pumps, stop leakages, and repair the damage. They’re hopeful that by working around the clock, the refinery can recover quickly, but they’re still expecting a lengthy shutdown. A recent statement reported that the earliest it could make a comeback would be the last week of August.
Impacts of the Shutdown
Unfortunately, closing the doors, even temporarily, will have a significant impact on Europe’s oil production. This Rotterdam-based plant is accountable for the production of 400,000 barrels of oil daily with more than 60 factories on-site. They cover the majority of oil sent to Northern Europe. Shell has not yet released any figures to explain the extent of the financial damage, but it won’t be pretty.
Their biggest customers provide oil to the majority of several nations including Ireland, the United Kingdom, Belgium, Denmark, the Netherlands, Norway, Iceland, Northern Germany, and Sweden. Southern Germany, Northern France, and Switzerland could also be affected. The prices of oil products in these countries, including jet fuel, diesel, and gasoline, will skyrocket as vendors are required to seek new suppliers for a month or so.
Oil prices will continue to rise until well after the refinery opens once again, and it’s not clear if the low prices of the last couple of years will return.
A Sudden Downfall
Before this unfortunate incident, Shell was reaping the rewards of the oil industry. In this year’s second quarter, Shell announced net earnings of $3.6 billion, three times their usual. This revenue hike comes from higher oil prices that caused the prices of oil products to rise as well. Advancements in pricing efficiency also contributed. In total, earnings rose to $2.5 billion, an increase of 39 percent.
Now that they’ve shut down production, it will take months, if not years for them to reach this point of wealth again.
The company has also ceased flaring off stocks of gas. This is a safety procedure during a shutdown, but it will only last until the company is back up and running. When the site is up and running again, they’ll continue flaring off stocks. They’re hopeful that it can be done quickly so as to avoid inconvenience for their stockholders and to help build their wealth once again.