Looming Jet Fuel Shortages?

[clifford]

And who's to say it wasn't sabotage? We live in interesting times...

 

[RSD]

While it has had regular maintenance, running it flat chat is going to be problematic for a 70 year old plant. At least the fire has been put out

Its probably been quite a while since it was run at the rate it was doing just before the fire - it is possible that whatever failed hasn't been run for a few years, but that will all come out in the investigation.

In particular the part of the refinery affected was involved in LPG and non sniffing petrol but overall the plant is operating at reduced capacity.

Running at reduced capacity is a good outcome after the fire. The main thing is that nobody was injured - that is always a good outcome after events like this.

The CEO said that any reduction in production can be made up with fuel imports

Buying refined fuel on the spot market at the moment would be like buying PPE in the early days of Covid - locating some that is available will be the first challenge, and then you will need to pay extortionate prices for it.

 

[RSD]

And who's to say it wasn't sabotage? We live in interesting times...

I would be very surprised if it was - I very much suspect that the investigation will find that the failure was caused by equipment that was being run at much higher run rates than it has in a long time, or equipment that has been idle for a long time and was suddenly put into use again to enable higher production.

My understanding though is that Viva maintained the Geelong refinery a lot better than the old Altona refinery was being maintained before it was closed - at Altona it seemed like the only thing holding the corroded pipes together was the insulation wrapping on the outside - it seemed destined for a major fire but they closed it before that happened.

 

[clifford]

I would be very surprised if it was - I very much suspect that the investigation will find that the failure was caused by equipment that was being run at much higher run rates than it has in a long time, or equipment that has been idle for a long time and was suddenly put into use again to enable higher production.

My understanding though is that Viva maintained the Geelong refinery a lot better than the old Altona refinery was being maintained before it was closed - at Altona it seemed like the only thing holding the corroded pipes together was the insulation wrapping on the outside - it seemed destined for a major fire but they closed it before that happened.

You could be right.

 

[Quickstatus]

you will need to pay extortionate prices for it.

However the Guvment is currently allowing importers to buy on the spot market with the Guvment picking up the tab for any difference between the spot price and selling price in Australia.

The spot market apparently can be extremely volatile and importers might not bid for the fuel if it thinks the price might fall in the short term. This mechanism gives the importer the ability to secure fuel more easily while providing some stability on the domestic market where it is sold.

Of course this does not require Albo to go gallavanting around the world to buy the fuel and then doing a press conference to say he bought 1 day of diesel.

 

[clifford]

But I have to say these refineries do not catch fire easily, so still a bit suspicious in my mind. Poor maintenance? Or what?

 

[RSD]

However the Guvment is currently allowing importers to buy on the spot market with the Guvment picking up the tab for any difference between the spot price and selling price in Australia.

We all know who pays for that in the end though...

Given that a lot of countries will be chasing fuel on the spot market I suspect that finding supply will be the bigger problem.

 

[RSD]

But I have to say these refineries do not catch fire easily, so still a bit suspicious in my mind. Poor maintenance? Or what?

I suspect that it will be as I suggested - either something that had an existing undetected weakness that became exposed when it was asked to run at a (much) higher run rate than it has previously, or something occuring in equipment that hasn't been run in a few years that was suddenly pressed back into service after a quick glance over as they needed to rapidly (and unexpectedly) increase production.

The other possibility was that something might have been overlooked when they were doing their risk assessments about increasing the production run rate - years ago when the equipment was running at a lower rate a part with a pressure rating of XX might have been replaced with a part with a pressure rating of X as the XX part was unavailable at the time - was fine back then as a rating of X met the run rate needs of the time and there was no expectation that the refinery would ever need to run again at these much higher throughputs - something like that might have slipped through the cracks.