Fire Damage at Exxon's Second Largest U.S. Refinery Leaves Restart Uncertain

Exxon Mobil Corp does not have a timeline for restarting fuel-producing units at its second-largest U.S. refinery following a fire Wednesday that cut production, sources said, as the shutdown boosted gasoline prices on Thursday.

Some units remain in operation at the refinery including a crude distillation unit (CDU), gasoline-producing fluidic catalytic cracking unit (FCCU) and a coker, the sources said.

A blaze on Wednesday cut output at Exxon’s 502,500 barrel-per-day (bpd) Baton Rouge, Louisiana, refinery. It was the third Exxon petrochemical plant along the U.S. Gulf Coast to suffer damage in less than a year. 2

No injuries were reported because of the fire that broke out from a natural gas pipeline shortly before midnight on Tuesday and burned for about seven hours on Wednesday, the sources said.

The blaze affected pipes laid on racks 50 feet in the air, and forced the shutdown of multiple units at the oil refinery and adjoining chemical plant, the sources said.

The fire forced the shutdown of three CDUs and an FCCU, but was confined to the pipe bundle where it broke out.

Operations at the refinery and chemical plant continue, Exxon spokesman Jeremy Eikenberry said on Thursday. He declined to discuss the status of individual processing units.

Exxon was meeting contractual commitments and expected to meet all customer commitments, he said.

The company and other refiners are suffering from weak margins due to excess supplies and falling demand for some fuels. Exxon U.S. refining profits fell 42% last year over 2018 due to weak margins and higher maintenance costs.

CDUs are the heart of the refining process, providing the primary breakdown of crude oil into hydrocarbon feedstocks that other production units convert into motor fuels and feedstocks for plastics.

Traders on the New York Mercantile Exchange attributed a jump in gasoline futures since on Wednesday and Thursday to the combined impact of an FCCU outage last week at the Phillips 66 Bayway refinery in Linden, New Jersey, and the Baton Rouge fire.

U.S. gasoline futures on the New York Mercantile Exchange gained 0.18%, or 0.28 cents at $1.5838 per gallon on Thursday. On Wednesday, it rose 4.4%, or 6.68 cents.

The blaze was the third major fire to hit Exxon’s U.S. operations since last March when a fire broke out in a Baytown, Texas, refinery unit. In July, a fire in Exxon’s Baytown Olefins plant injured 37 workers.

(Reporting by Erwin Seba; Additional reporting by Stephanie Kelly; Editing by Bernadette Baum and Diane Craft)