LyondellBasell's Houston Refinery in Shutdown Process

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--LyondellBasell Industries NV (NYSE:LYB) (LYB) (Rotterdam, Netherlands) is in the process of shutting down its 107-year-old Houston Refinery, though with upgrades and feedstock switching, IIR Energy believes the upstream sector will easily cope with the loss.

Processes to shutter the 268,000 barrel-per-day (BBL/d) refinery located on a 700-acre city just outside the city limits of Houston and Pasadena are ongoing. The 147,000- BBL/d crude distillation unit (CDU) and the 42,000-BBL/d delayed coker were shut in January. Permanent shutdown procedures on the 115,000-BBL/d CDU, 57,000 BBL/d delayed coker, 90,000 BBL/d fluid catalytic cracking unit (FCCU) and the 91,000 BBL/d Vacuum/Crude 537 are expected to be completed by February 28, according to Industrial Info.

Some media outlets had suggested plant-wide operations halted earlier this week, though IIR Energy expects closure of the entire refinery to take until about March 31.

The refinery began operations in 1918, becoming one of the first refineries to be situated on the Houston Ship Channel. After several years of trying to sell it off, LyondellBasell announced plans in 2022 to close it down.

Producing mostly transportation fuels such as gasoline and diesel, the company said the refinery no longer fit in a business model focused on plastics. Layoff notices to the estimated 1,000 employees at the refinery were issued in January.

As with other aging refineries, the Houston facility had its issues. It was closed during Hurricane Ike, a Category 4 storm that rocked the U.S. Gulf Coast in 2008. There was a fire at the facility in 2016. Upgrading the plant would have cost about $1.5 billion.

Signing two contracts in Europe for long-term energy supplies from offshore wind, LyondellBasell in January said it was focused on the transition away from fossil fuels.

"Adding these long-term agreements to our portfolio supports price stability to increase the use of renewable energy in a value-accretive way," said Chris Cain, a net-zero transition specialist at the company. "Our diverse global portfolio of renewable energy not only reduces our carbon footprint but also supports our customers' ability to meet their CO2 reduction objectives."

In its statement on fourth-quarter results, the company added that "refining operations will cease in the first quarter of 2025, a strategic milestone paving the way for continued growth in circular and low-carbon feedstocks and products."

The company was studying the conversion of the refinery to produce renewable-based polymers from waste plastics in a pyrolysis process. In 2023, meanwhile, a consortium of LyondellBasell, Chevron Corporation (NYSE:CVX) (Houston, Texas) and Uniper (Dusseldorf, Germany) considered studies to evaluate and potentially advance the development of hydrogen and ammonia production at the facility.

"Specifically, the consortium will assess the potential for producing hydrogen, using natural gas with CCS (carbon capture and storage) and renewable hydrogen via electrolysis, to supply end-use markets, including the ammonia, petrochemicals, power, and mobility markets," they said.

LyondellBasell took a loss during the fourth quarter, but said it expected a recovery in its North American operations because of an expected uptick in the demand for polyolefins, a ubiquitous compound in the chemical industry. It added that tariff and trade uncertainties, however, were potential headwinds.

Shutting the Houston refinery shouldn't have much of an impact downstream as the Gulf Coast has added refining capacity through expansions that makes up for the loss.

Hillary Stevenson, senior director for energy market intelligence at IIR Energy, sees the refining sector changing as renewable fuels and electric vehicles remove some gasoline demand in the U.S. market.

Past what she said was the golden age of refining, Stevenson said she sees capacity expansions and overhauls compensating for the capacity lost from the Houston refinery closure. The U.S. added 149,000 BBL/d in incremental expansions and 250,000 BBL/d in new unit capacity in 2023 and 2024, mostly to consume light domestic crude. Another 115,000 BBL/d in expansions are expected by 2028.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).