Working with personal safety shows results in Refining
Overall, 2016 was a good year for Preem’s refineries. Thanks to a very strong fourth quarter with good margins and stable production, earnings were in line with plan. It was also one of the best years yet regarding personal safety.
The Refining segment manufactures end products from the raw materials provided by Supply and Trading to the two refineries in Lysekil and Gothenburg. Daily production optimization enables production to be adapted based on changes in the margins between the raw material prices and the sale prices.
The segment’s persistent work with zero tolerance for accidents has been proven in actual results, and 2016 was one of the best years ever in terms of accident frequency rate leading to absence.
The refinery in Gothenburg
Gothenburg’s profitability exceeded plan thanks to good margins, particularly in renewable production. During the year, the refinery had minor stoppages in various plants to counter limitations and maximize production.
Increased renewable production
Preem decided to go ahead with the construction of a hydrogen plant in Gothenburg, with the main objective of increasing renewable production.
The refinery in Lysekil
One of the year’s major events was the extension of a planned stoppage at the hydrogen production unit (HPU) in Lysekil. It was caused by the impact of material on the hot oven. All the heat-affected equipment was replaced and we now have a practically new oven in that facility. The facility supplies the diesel plant with hydrogen, so production also stopped there during the period. We learned a lesson from the incident and now plan to replace these process parts in connection with planned stoppages.
New vacuum distillation unit
The major project of building another vacuum distillation unit really got going during the year. All blasting and excavation work was carried out in preparation for construction of the facility.
Conversion of heating oil into diesel
Much time and effort has gone into compiling the necessary data for a major future project in Lysekil that aims to convert heavy heating oil mainly into low-sulfur diesel. The submission of the application for an environmental permit was an important milestone in the process.
In addition to these major projects, several very profitable projects for greater flexibility at our tank facilities were completed. In Lysekil, a new large tank for vacuum gas oil (VGO) was built and in Gothenburg, several projects for blending various crude oil or product streams were implemented. Overall, the projects will allow us to utilize the facilities in a more optimal way.
Continuing growth in 2017
In 2017, production will be impacted by scheduled plant shutdowns in Lysekil and a lengthy shutdown in Gothenburg. In Lysekil the stoppage is for regular maintenance and in Gothenburg virtually all plants and units will be shut down for inspection before the next operational period. It will require sharp focus and extensive resources. In addition to the plant shutdowns, ongoing projects will continue to be in focus in the coming years. Both the new vacuum distillation unit and the new hydrogen plant in Gothenburg will be completed around year-end 2018.