Shell may permanently shut Louisiana refinery next week

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A logo for Shell is seen on a garage forecourt in central London March 6, 2014. REUTERS/Neil Hall

Royal Dutch Shell may begin the permanent shutdown of its 211,146 bpd Convent, Louisiana, refinery early next week, people familiar with plant operations said.

Shell announced on Nov. 5 the refinery, located 57 miles (92 km) west of New Orleans, was to close after the company failed to find a buyer amid the COVID-19 pandemic.

A Shell spokesman did not reply to a request for comment.

The Convent refinery is the first U.S. Gulf Coast refinery to permanently close because of the pandemic-related decline in demand for refined products. Eight other North American plants have been idled or targeted for shutdowns.

The coronavirus pandemic cut fuel demand by up to 30% earlier this year, and even as economies recover, the outbreak will likely reduce global demand by 4.7 MMbpd over the next five years, analysts have said.

Three U.S. oil refineries have shut already this year because of weak demand for jet fuel, diesel and gasoline amid a slowing economy.

In August, Calcasieu Refining idled its 135,500-bpd Lake Charles, Louisiana, facility, citing weak margins from falling demand. Marathon Petroleum Corp has said it will not restart production at its refineries in Martinez, California, and Gallup, New Mexico.

Shell this month halved its crude processing capacity at its 500,000 bpd Pulau Bukom plant in Singapore. Plants in the U.S. and Europe are considering converting some facilities to produce biofuels.

U.S. refineries in August ran at 78.8% of their 18.6 MMbpd capacity, according to the U.S. Energy Information Administration, down from 83.1% in March.