Royal Dutch Shell has announced that only one of its unit is yet to be restarted at its Convent refinery in the state of Louisiana following a fire that led to a shutdown. Despite the heavy-oil hydrocracker which produces approximately 45,000 barrels per day remaining shut, it is expected to resume production before this week ends. A part of the unit will remain shut as it undergoes an overhaul that is expected to take a month.
The fire which caused the closure of the refinery had broken out on a substation that is under the management of Entergy Corp, the refinery’s main power supplier. So far this year this was the second time fire to erupt at the Convent refinery. It is the third fire since August last year. Currently Royal Dutch Shell is the sole owner of the Convent refinery having ended a partnership the oil major had with Saudi Aramco which lasted two decades.
Offshore wind farm
The partial restarting of operations at Shell’s Convent refinery coincides with reports indicating that the oil major is seeking to dispose of a stake held in offshore wind energy projects emerging. Shell’s partners in this project include Mitsubishi Corp and Eneco Holdings NV. According to sources the three firms want their stake reduced by up to 45% and scale back the financial exposure in order to redeploy the resources that will be free in new projects which have potential for bigger returns.
Shell’s strategy is early development of wind farms and then taking steps to avoid owing such assets for the long term.
“This is part of a planned assessment by the consortium on how to best fund the project and future offshore wind projects for the long term. Offshore wind projects require substantial capital. We are in the energy transition for the long-haul,” read a statement from Eneco Holdings which the other partners are said to have endorsed.
The wind farm was the first large-scale offshore clean energy project by the Anglo-Dutch oil giant. Shell, Eneco and Mitsubishi won the contract last year to put up the wind farm 14 miles off Zeeland, a port city in the Netherlands. There were 26 other bidders who participated in the government auction.
Since the combined capacity of the wind farm is 700 megawatts, an investment of $1.4 billion may be required prior to the project’s completion in three years’ time. This means that the value of a 45% stake could be approximately $630 million.