Exclusive: Illinois refinery hobbled as Citgo bypasses 'burned up' unit

By Erwin Seba HOUSTON (Reuters) - Citgo Petroleum Corp.'s refinery in Illinois may be operating at little more than half capacity for months as workers bypass a vital secondary unit that "burned up" in a three-hour fire last week, sources say. A leak of combustible fluid from machinery hot enough to melt lead is viewed as the likely cause of the October 23 fire at the 174,500 barrels per day (bpd) plant in Lemont near Chicago, according to sources familiar with the investigation of the blaze. Citgo says it is now set to restart some units but will keep the vacuum distillation unit (VDU) shut for now. As a result, fuel output will be sharply lower and the plant may need to seek lighter, sweeter of crude in order to reduce residual fuel output from its typical diet of Canadian crude oil, sources said. The fire stemmed initially from a leak that workers found while replacing a pump October 23 in the 'bottoms' section of the 75,000 bpd VDU, which refines residual crude from the crude distillation unit (CDU) and boosts yields of motor fuels from a barrel of oil. The bottoms section is where the gunky residual crude oil accumulates in a distillation unit. Unlike the CDU, which operates at or near atmospheric pressure, a VDU refines residual crude in a vacuum, and is often seen as an extension of the crude unit, which begins the refining process by breaking oil down into feed for all other units at a refinery. As the flow of leaking fluid increased, workers hoping to prevent a fire began spraying water on the unit, which typically runs at about 650 degrees Fahrenheit (343 Celsius), hot enough to melt lead. They halted work on the pump and began preparing to address the leak after retreating from the VDU, fearing for their own safety. Despite the water spray, the fluid found an ignition source. The conflagration burned for three hours at the base of the VDU, causing heat distress to the supports. "It about burned that VDU up," one of the sources said. The blaze caused no injuries, but heavily damaged the VDU and some of its supports, while doing lighter damage to the piping connecting the VDU with the crude unit. Initially, it appeared that the CDU would be out of commission with the VDU for up to six months of repairs. But as Citgo officials got a closer look at the weekend, further inspection showed the CDU could likely resume production. The VDU, however, may still need up to six months of repairs, the sources said. Citgo declined to comment on the account. 'CUTTING OUT' THE VDU Citgo said on Monday that it would restart the atmospheric section of the crude unit, but would keep the VDU shut, a process called "cutting out" the unit. Sources said it is considered major surgery, but is not an uncommon step. Following a disastrous June 2012 leak that heavily damaged a giant CDU at Motiva Enterprises 600,000 bpd Port Arthur, Texas refinery, officials weighed restarting the VDU, which was undamaged. Ultimately, they decided against doing the work to re-route piping in favor of starting repairs to the CDU. Along with the CDU and the VDU, most of the refinery's other units, including the 69,000 bpd gasoline-producing fluidic catalytic cracker and 40,000 bpd coker were shut after the fire. These units are expected to restart sometime after the CDU resumes produciton, the sources said. Even so, production is expected to be significantly restricted. The refinery's 40,000 bpd delayed coking unit won't be able to take the residual crude from CDU as it is already processing near its capacity, the sources said. Residual crude coming from the CDU will have to be sold to other refiners. Citgo may also have to shift to a different crude oil for the refinery, which currently processes heavy and medium crude from Canada's tar sand fields, as these tend to produce a higher volume of residual crude. The start of the Citgo blaze was reminiscent of how the August 6, 2012 inferno at Chevron Corp.'s Richmond, California refinery began. In the Chevron Richmond blaze workers were attempting to find the source of a leak in piping on the refinery's sole crude distillation unit when liquid, thought to be diesel, ignited. The CDU was shut for nearly 10 months and the plant's gasoline production was cut by at least 50 percent. (Reporting By Erwin Seba; Editing by Terry Wade, Jonathan Leff, Andrew Hay and Leslie Gevirtz)