Royal Dutch Shell Plc said on Nov. 5 it will shut down its refinery in Convent, La., the largest U.S. facility to close since the coronavirus pandemic first hit and devastated economic demand worldwide.
The shutdown, to occur this month, comes after Shell failed to find a buyer.
The refinery is the ninth in North America either to announce a shutdown or to be idled since the pandemic, which has delivered a heavy blow to fuel demand globally. The U.S. is the world's largest fuel consumer.
Shell said it failed to find a buyer for the 211,000-bbl/d refinery after announcing plans to sell it in July.
“After looking at all aspects of our business, including financial performance, we made the difficult decision to shut down the site,” Shell spokesman Curtis Smith said in an emailed statement.
Refining margins have been down substantially since the pandemic started. The gasoline refining margin is currently at $8.79/bbl, below the threshold where most refiners can profit.
Once the shutdown is complete, Shell will continue to try to divest the refinery, the company confirmed. It expects to sell all but six refineries and chemical plants and is considering closing facilities it cannot sell, the company told investors on its quarterly earnings call this week.
"We recognize the market is not great at the moment in terms of divesting assets... if it's not possible, we'll consider closing and shutting down. That's ultimately, the last option we'd like to pull," said CFO Jessica Uhl on the call.
The company said in 2019 it would structure its operations to match the future market for downstream products with a focus on its chemicals business.
In February, Shell sold its 156,400 bbl/d Martinez, Calif., refinery and logistics assets to PBF Energy Inc. for $960 million plus the price for oil and refined products on hand.
Shell said it will open a selective voluntary severance program to potentially create other roles for workers.
Late last month PBF Energy said it will shut most refining units at its Paulsboro, N.J., refinery.
Elsewhere, Canada’s Come-by-Chance plant in Newfoundland and Labrador has been idled since May. HollyFrontier Corp. shut down its Cheyenne, Wyo., refinery, Marathon Petroleum Corp. began closing refineries in Martinez, Calif., and Gallup, N.M., while Calcasieu Refining Co. idled its Lake Charles refinery in southwest Louisiana.
Phillips 66 Co. announced plans to shut its plant in Arroyo Grande, Calif., in 2023 and plans to reconfigure its San Francisco Refinery to produce renewable fuels.
If Venture Global goes forward with the proposed Plaquemines LNG export plant in Louisiana this year, it could be the only U.S. LNG project to enter construction in 2020.
Front-month natural gas futures rose 11 cents, or 3.8%, to settle at $3.023/MMBtu. That was their first close over $3 since January 2019 and puts the contract up almost 70% from a recent low.
Company is betting on a sharp rise in demand for natural gas for power generation.