Monday, September 19, 2005

There's Money To Be Made: Refiners Put Off Maintenance

Well this makes me feel a whole lot better
US refiners are putting off scheduled maintenance to their plants in response to a White House call to maximise petrol and diesel production following Hurricane Katrina. The move has raised concerns about long-term risks among analysts, energy executives and safety officials.

The Energy Department told refiners informally that they should boost production after the storm severely damaged oil and gas facilities in the Gulf of Mexico, sending petrol prices rocketing to record highs. Although the refiners say no formal request has been made, they admit that the White House made its position known. Several US refiners have since said they would cut back on maintenance.

"We plan to review all planned maintenance and will defer any maintenance projects unless a delay will jeopardise the safety or reliability of our plants," said Mary Rose Brown, a spokeswoman for Valero, one of the biggest US refiners.

Yet analysts note maintenance, by its very nature, is essential to keeping refineries in proper working order.

"Deferring refinery maintenance has its risks," says JP Morgan's analysts. "Working a refinery at full capacity and without necessary tune-ups can damage units, resulting in potentially very costly and extended unplanned repair work, which would be very unwelcome, given the tight market conditions."

Indeed, one energy executive said liability issues could arise if an accident takes place, leaving the White House open to blame.

Craig Stevens, a spokesman for the Department of Energy, said several oil executives had told Samuel Bodman, the energy secretary, that they would put off maintenance. His response was, if that was something they needed to do, that was fine, but he would never condone any activity that would put workers in danger, Mr Stevens said.
Or, as Richard Nixon said, "We could do that, but it would be wrong, that's for sure."

Of course, if anything does go wrong, it will be the workers' fault.