Strike on at Grangemouth

Mitch · Post by **Mitch** » 24 Apr 2008, 08:47

And another thought....... What if, say, the refinery is below "break even" at $120 a barrel? What if the blokes what own the refinery, don't own the rigs? What if the refinery bloke said to the oil blokes, "we can only give you $80 or 90 a barrel, otherwise we go broke", and the oil geezer says "You're allright mate, we'll just ship it off in tankers - theres loads and loads of blokes willing to give us $120.00 a barrel, you have a good weekend". So the refinery geezer says to the gov'ment, "Ah, well, we'll just shut up shop till we find some one who'll sell us oil at $80.00 a barrel - looks like it could be a while though".

Erm, if they are listening to Yergin or Cera - that could be a month at least!!

PS_RalphW · Post by **PS_RalphW** » 24 Apr 2008, 09:23

I'm wondering if we are overblowing the effects this strike will have. We had quite a large fire at a refinery last year and that had minimal impact. Just one report of localised shortages.

I'm not saying this won't be bigger, but the strike is two days, so presumably the Forties oil will be flowing again in at most 3 days. That is 2 million barrels. Not the end of the world, even now. Gas might take a bit longer, and there might be some industrial customers interrupted, but we still have 24% of winter long term storage, and it is not cold at the moment. It will impact the gas shortage going into next winter, but that future would be discounted by the public even if they thought of it.

We have 50-70 days fuel reserve, so the only problem will be distribution, and some localised shortages and rationing will probably occur. The only thing that could cause significant disruption would be panic buying, so it seems perfectly reasonable for the media to (be told to) lay off the panic alerts, because they are the last thing we need.

Of course it is fun to speculate on underlying motives, crack spreads, credit crises etc. They may be true, but we won't know in advance until the gates are locked and the scrap merchants arrive.

Mitch · Post by **Mitch** » 24 Apr 2008, 09:38

Very true - Buncefield, (not a refinery, but a significant part of the chain), went boom a good while ago, and has been scrap ever since. Appears to have had zero effect whatsoever.

Post by **mikepepler** » 24 Apr 2008, 09:43

Mitch wrote:Very true - Buncefield, (not a refinery, but a significant part of the chain), went boom a good while ago, and has been scrap ever since. Appears to have had zero effect whatsoever.

Erm, didn't refuelling limits on planes at Heathrow continue for well over a year as a result? Not sure when they stopped, or even if they have.

Even if there is no impact other than that caused by panic buying, with the global oil/fuel market as tight as it is, every day with some production stopped is another day of supplies drawn down. As we're barely meeting demand as it is, what's the chances of the stocks being replaced? And doesn't that mean that we're just that little bit less resilient next time we need those stocks?

RogerCO · Post by **RogerCO** » 24 Apr 2008, 09:48

We've discussed the mathematics and psychology of the impact of shortages on here before.

Essentially it only requires a fairly small proportion of motorists (<20%) to decide to keep their tank average three-quarter full rather than half full to create a shortage that lasts for about 2-3 weeks. ISTR that there is less than 5% spare capacity in the supply chain from refinery to pump (ie number of road tankers available for extra delivery runs).

As people see 'no fuel' signs, more and more decide to top up when they can, so the amount of fuel being stored in the nation's vehicle fleet creeps up faster than the available supply even without any actual shortage coming out of the refineries.

If there is no actual shortage it takes about 3 weeks for the panic buying demand to be fulfilled, after which there is a temporary glut whilst people run their fuel tanks back down to an average half full.
Throw in a real shortage and you've got a slightly bigger problem.

I expect we will see more of this chaotic behaviour in all markets, not just petrol, over the coming months and years. It will be one feature of the powerdown world - random shortages of different goods for no obvious reason.

biffvernon · Post by **biffvernon** » 24 Apr 2008, 11:36

Of course shutting down Grangemouth has nothing whatsoever to do with what Tess was telling us about refinery margins.

Post by **mikepepler** » 24 Apr 2008, 12:43

http://business.timesonline.co.uk/tol/b ... 805562.ece

Plans to haul fuel by road from locations in England and Wales to Scotland will be put in place today ahead of a two-day strike at Grangemouth, Scotland's biggest oil refinery.

Our local garage seems busier than usual today. No big queues, but a car at every pump when I passed it twice this morning, an hour apart. Not normally this busy I think...

Any other anecdotal reports? As mentioned above, it doesn't take many people to go and fill up for the effects to become noticeable by everyone else, then the thing takes on a life of its own...

eatyourveg · Post by **eatyourveg** » 24 Apr 2008, 12:52

I buy biodiesel from a guy that makes it locally, my Mrs went to fill up the car and get a few cans in yeterday, the guy couldn't understand why he was so busy this week, run off his feet in fact - he hadn't heard about the Grangemouth thing!

Erik · Post by **Erik** » 24 Apr 2008, 13:45

RalphW wrote:I'm not saying this won't be bigger, but the strike is two days, so presumably the Forties oil will be flowing again in at most 3 days.

Two days... but in the Grangemouth article at TOD they say that "Ineos have reported that if the refinery is closed it may take over a week to restart."

Dunno how reliable this is though.

PS_RalphW · Post by **PS_RalphW** » 24 Apr 2008, 13:58

Erik wrote:
RalphW wrote:I'm not saying this won't be bigger, but the strike is two days, so presumably the Forties oil will be flowing again in at most 3 days.
Two days... but in the Grangemouth article at TOD they say that "Ineos have reported that if the refinery is closed it may take over a week to restart."

Dunno how reliable this is though.

The refinery will take time to restart, but most of the Forties oil is pumped through or exported to other refineries. I assume pumping can restart quickly, and until today it was not certain it would be interrupted at all.

Natural gas is more of an issue, because it is processed at grangemouth before it can be pumped on into the grid for consumption or further processing. This would be a big hit to our gas supplies, and our winter storage levels are low. If it takes more than 5 days to restart, we might see gas shortages.

Post by **adam2** » 24 Apr 2008, 14:18

A scottish bus company state that they can not run any services after Sunday ! does not sound as though keep much of a stock, which is a bit worrying.
So much for the First minister asking people to use public transport to conserve fuel
Details about half way down this article
http://news.bbc.co.uk/1/hi/scotland/7362709.stm

Erik · Post by **Erik** » 24 Apr 2008, 14:32

RalphW wrote:Natural gas is more of an issue, because it is processed at grangemouth before it can be pumped on into the grid for consumption or further processing. This would be a big hit to our gas supplies, and our winter storage levels are low. If it takes more than 5 days to restart, we might see gas shortages.

I've read that if these fields shut down there would be 40 to 50 million cubic meters/day taken out of the gas market... but that this could be covered readily enough by extracting gas from storage and stepping up imports through the Belgian Interconnector. It would have an impact on price but might not necessarily lead to physical supply interruptions. Unless for some reason the shutdown lasts longer than expected.

Aurora · Post by **Aurora** » 24 Apr 2008, 14:42

The Guardian - 24/04/08

Britain's Business Secretary John Hutton said on Thursday that fuel stocks and imports should be sufficient to maintain supplies during a strike at the Grangemouth refinery in Scotland.

Hutton said there was no need, at present, for the government to take steps under its emergency powers.

"We have contingency plans in case of need and we are determined to respond effectively if this becomes necessary," Hutton said in a statement to parliament on the industrial dispute at Grangemouth.

Article continues ...

Andy Hunt · Post by **Andy Hunt** » 24 Apr 2008, 14:48

Well the government can't exactly force the employees of a private company to go back to work . . . can they?

Post by **mikepepler** » 24 Apr 2008, 15:21

http://uk.reuters.com/article/oilRpt/id ... 8720080424

The power station at the Grangemouth refinery will shut on Saturday due to a two-day strike planned at the plant to start on Sunday and this will force the closure of BP's Kinneil Forties oil processing plant, a union official said on Thursday.

http://uk.reuters.com/article/oilRpt/id ... 0420080424

The refinery has been shutting down gradually all week and once a heat and power station on the site shuts on Saturday, the Forties pipeline will have to close as the power plant supplies the nearby Kinneil facility which processes Forties crude.

"Without the power and steam, we can't keep the Kinneil operation running and so we would have to shut down," a BP spokesman said, adding the Forties pipeline would also have to shut.

The 700,000 barrel-a-day Forties pipeline carries about half of Britain's North Sea oil production.

BP has said that it would need to start shutting the pipeline about 24 hours before the shutdown of the Grangemouth power station.

Closure of the pipeline would also hit Britain's gas production from fields connected to the Forties system. British gas prices surged over 10 percent on Thursday on worries about North Sea supplies.

The National Grid said any closure of the refinery would not cause gas supply shortages as demand is low due to the spring weather and plenty of alternative supplies are available.
...
Barges of diesel fuel in Europe's Amsterdam-Rotterdam-Antwerp refining hub traded at premiums of at least $51 per tonne to benchmark London ICE gas oil, an $11 gain from the previous evening.