U.K. refinery closure has little effect

Last month's decision by Shell U.K. Ltd. to close its Shell Haven refinery in Essex, U.K., is likely to have little effect on the U.K. refining industry. This is the view of Wood Mackenzie Consultants Ltd., Edinburgh, which noted that the plant represents only 5% of total U.K. refining capacity and less than 1% of European capacity. Shell Haven's crude distillation capacity is 102,000 b/d, and while it is placed by Wood Mackenzie as seventh out of 101 European refineries in terms of

July 6, 1998

2 min read

Last month's decision by Shell U.K. Ltd. to close its Shell Haven refinery in Essex, U.K., is likely to have little effect on the U.K. refining industry.

This is the view of Wood Mackenzie Consultants Ltd., Edinburgh, which noted that the plant represents only 5% of total U.K. refining capacity and less than 1% of European capacity.

Shell Haven's crude distillation capacity is 102,000 b/d, and while it is placed by Wood Mackenzie as seventh out of 101 European refineries in terms of complexity, it is small compared with Shell's 246,000 b/d plant at Stanlow, U.K. (OGJ, June 22, 1998, p. 40).

Sat Roopra, senior consultant at Wood Mackenzie, said, "This an- nouncement shows that refinery sophistication alone is not enough to ensure survival. Today's refinery needs scale as well."

Shell spent $380 million upgrading Shell Haven in 1992, but according to the analyst, decided that, with ever-tightening environmental specifications and related investment, the refinery is too small to be a core asset.

"As a result of the closure," said Wood Mackenzie, "in the U.K., Shell will move from being surplus on all products to a position where it is balanced on gasoline and fuel oil and in deficit on middle distillates.

"However, this is not an issue, as Shell will be able to import large quantities of middle distillates from its Pernis refinery in the Netherlands. The impact on overall product balances in the U.K. will be minimal."