Refinery faces challenges after decision

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Burnaby’s Chevron refinery will face ongoing challenges in the wake of a National Energy Board decision not to grant the company prioritized access to crude from the Kinder Morgan pipeline, but there are no current plans to increase rail shipments.

On July 11, the board released its decision, rejecting Chevron’s application for priority destination, which was an attempt to secure a more steady and reliable supply of oil. The refinery has been bringing in oil via truck and railcar to make up for supply shortages.

According to Chevron’s Ray Lord, the decision will mean continuing problems for the refinery but no sudden changes in rail shipments of oil.

“The NEB’s decision will result in the refinery facing ongoing challenges in securing a reliable, cost-effective supply of crude oil,” Lord said. “Overall, there won’t be any immediate changes, as we’ve been operating under these apportionment conditions since late 2010. In the meantime, we will continue to compete for space on the Trans Mountain pipeline while our existing crude by truck and new crude by rail facilities are being used to secure the supplemental volumes we’ve been receiving since last year by truck and more recently via rail.”

Recently, Chevron has been receiving an average 33,000 barrels of oil per day from Kinder Morgan’s Trans Mountain pipeline, but that’s short of the minimum run rate of 40,000 daily barrels, especially considering that the refinery can process up to 55,000 barrels. Roughly a year ago, Chevron began bringing approximately 1,000 barrels of oil per day via rail to Langley and then trucking the shipments in the rest of the way to Burnaby.

Chevron also built a new facility at the refinery to receive rail shipments directly, and that went into operation in May, which has helped bring in an additional 6,500 daily barrels.

When asked what would happen if Chevron can’t get enough oil, Lord said that as a general practice, Chevron does not comment on specific operating plans or current run rates, but refineries are designed to operate optimally at a certain capacity.

“Below that capacity, operational adjustments are made to the various inter-related systems and units in order to accommodate the reduced run rate until such time as normal operation is resumed,” he said.

As for safety concerns regarding rail shipments of oil, given the tragic July 6 train derailment and explosion in Lac-Megantic, Que., Lord said the transportation of potentially hazardous commodities has been taking place safely for many years.

“Our economy and quality of life depend on those commodities, and preventing incidents from occurring in the first place has always been our priority,” he said.

Chevron’s new off-loading rail facility has been designed and engineered to current safety standards, and rail cars are regularly inspected and the facility has been equipped with required containment and fire suppression systems, he added.

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