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Kenai refinery turnaround delayed to fall due to coronavirus concerns
Steve Sutherlin Petroleum News
Marathon Petroleum Corp. said it has postponed a mid-April turnaround operation at its Kenai refinery due to coronavirus concerns.
“It’s a pretty extraordinary measure,” Casey Sullivan, Marathon government and public affairs manager, told Petroleum News March 24. “This is a program that is tens and tens of millions of dollars; it’s hundreds and hundreds of contractors; it’s kind of a big ship and it is a hard thing to turn - or turn off.
“Lots of things in the air. We’ve been able to do it, with teams working really hard to do that ... to pause it as best you can.”
The company plans to get the turnaround back on the schedule before the end of 2020.
Sullivan said, given everything Marathon knows at this juncture, the turnaround can be rescheduled for fall or thereabouts.
“We’ll kind of stage it as we need to - and of course we’re working with all of our regulatory folks to make sure that the plan is appropriate,” he said.
Sullivan said that Marathon is aware of and concerned about the disruption to the schedules of the participants in the turnaround, but the company is sure it has made the right decision under the circumstances.
“It’s about health and safety; that’s the bottom line,” he said, adding, “The environment around us - the community where we live, and our employees ... the health and safety of both are paramount.”
“It was a hard decision but it was absolutely the right decision.”
“The leadership team did not take this decision lightly,” Cameron Hunt, general manager of the Kenai refinery said in a March 18 release. “We are taking these extraordinary measures now to protect our people and the community, and to ensure the Marathon Kenai refinery continues to supply the state of Alaska with critical transportation fuels.”
“The refinery team will continue to work the turnaround plans, and work with the appropriate regulatory agencies to ensure its next steps are safe and compliant with state and federal requirements,” Hunt said. “We are actively working with our contractor support companies, regulatory agencies and community as we define our next steps in rescheduling this turnaround.”
“The Kenai refinery is critical infrastructure for the state of Alaska, especially during these trying times,” he said. “For more than 50 years, the refinery has safely, and reliably produced quality fuel products used to move Alaska.”
Turnaround brings teams, specialists together from near and far “When we do turnarounds, it’s involved,” Sullivan said.
“It’s a regulatory, integrity-driven inspection,” he said. “You do upgrades; you bring in lots of teams, specialists, from both local and from around the nation.”
Many of these specialists are focused specifically on refinery turnarounds
“They specifically work on these; this is exactly what they do,” Sullivan said.
Travel uncertainties, as a national approach to the COVID-19 pandemic unfolds, combined with the fact that some key specialists would be mobilized from out of state, contributed to the decision to defer the turnaround effort.
“Had we moved forward we would have brought in those teams,” Sullivan said. “Some would have had to fly, but many are here locally, and some have been here for some time.”
“It was just an abundance of caution,” he said. “We operate at the pleasure of our community, and it just wasn’t the right time to do it.”
Not business as usual Although the turnaround was delayed, the atmosphere around the refinery is not routine, Sullivan said, adding that Marathon is responding appropriately to the coronavirus as the company carries on refinery operations.
“We’ve implemented procedures to minimize any person-to-person contact,” he said.
Marathon said the Kenai facility quickly implemented COVID-19 specific screening procedures, issued appropriate health practice advisories and implemented telecommuting for employees non-essential to critical day-to-day operations.
“The refinery team will continue to work the turnaround plans, and work with the appropriate regulatory agencies to ensure its next steps are safe and compliant with state and federal requirements,” Hunt said. “We are actively working with our contractor support companies, regulatory agencies and community as we define our next steps in rescheduling this turnaround.”
Sullivan said the company is following social distancing rules, even among close work associates.
“We really have the core group on their double shifts working to maintain the integrity of the refinery to keep operations going,” he said. “It’s a tight group.”
Marathon does not anticipate any coronavirus-related interruptions to its usual feedstock supply to the refinery, Sullivan said. The facility uses every drop of Cook Inlet oil production, and it takes in crude from the North Slope, in addition to cargoes from the Bakken and elsewhere.
Sullivan said Marathon has also been a participant in contingency planning discussions with the Port of Anchorage, on strategies to ensure that the flow of goods needed in the state - including petroleum products - continues to move through Alaska’s largest port to where it is needed.
Marathon is a significant user of the port’s petroleum products and cement handling facilities.
Refining in Nikiski since 1969 The Kenai refinery, on Cook Inlet 60 miles southwest of Anchorage, began operations in 1969.
Since then, there has been more than a billion dollars of investment in the refinery that expanded its capacity, complexity and improved its environmental performance, including completion of a hydrocracker in 1980 and the launching of a ULSD, or ultra-low sulfur diesel, project in late November 2005.
Today the Kenai refinery at Nikiski employs 250 Alaskans, has a refining capacity of 68,000 barrels per day and produces gasoline and gasoline blendstocks, jet fuel, diesel fuel and heavy fuel oils, propane and asphalt.
A 70-mile, 48,000 bpd common-carrier products pipeline transports jet fuel, gasoline and diesel fuel to the Port of Alaska in Anchorage and the Ted Stevens Anchorage International Airport. Wholesale delivery occurs through terminals in Kenai, Anchorage, the Nikiski dock and the Port of Alaska.
It distributes these fuels from Nikiski to North Pole through a series of pipelines
In addition, the refinery supplies the network of Tesoro and USA Gasoline stations throughout Alaska.
Crude oil is delivered to the refinery by truck, double-hulled tankers through Cook Inlet and pipeline from the Kenai Peninsula and Cook Inlet.
In 2018, Marathon acquired the Kenai refinery when it merged in a takeover with Andeavor, a deal that closed later that year.
In the April 3 deal, Marathon agreed to buy rival Andeavor for $23.3 billion, creating the largest independent fuel maker in the United States, with an initial enterprise value greater than $90 billion.
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