Tuesday 26th June 2018
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New Zealand Refining's hydrocracker unit has been shut down after a newly installed valve failed, lengthening delays from its scheduled refinery maintenance shutdown.
A hydrocracker uses hydrogen to break down heavy oil fractions, recovered from crude oil, to produce petrol, kerosene - used as jet fuel - and diesel. NZ Refining is New Zealand's only oil refinery, and describes its hydrocracker as "the heart of the refinery."
The Whangarei-based company said the unit was shut down last night "following a weld failure on a newly installed OEM isolation valve", unrelated to last week's hydrocracker leak issue, and it would give a further market update "once we have established the repair and restart plan."
The refinery-wide shutdown was planned to run in stages from April 20 to June 8, and NZ Refining was to spend $85 million on it with a predicted financial impact of $30 million, but the restart was delayed due to maintenance issues and minor leaks. Last Friday, the company said there had been a delay with the hydrocracker due to two minor leaks and its team was assessing when the unit would be restarted, and yesterday it said it expected the hydrocracker to produce on-specification fuels that day.
NZ Refining also said yesterday that the shutdown would cost $25 million to $30 million more than the $85 million it previously forecast, implying a cost of $110 million-to-$125 million, and will cut $40 million from profit in calendar 2018 as opposed to $30 million previously flagged.
The company's shares last traded at $2.53, and have fallen 4.5 percent this year.
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