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Streamlining the UK’s downstream infrastructure

THE JULY 2016 ANNOUNCEMENT THAT BP INTENDED TO SELL ITS BELFAST, HAMBLE AND NORTHAMPTON TERMINALS TOGETHER WITH ITS 50% SHARE OF ITS KINSGBURY FACILITY (WITH SHELL), AND A THIRD SHARE OF THE UKOP SYSTEM, IS PART OF A RATIONALISATION PROCESS WHICH HAS BEEN ONGOING FOR 40 YEARS

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Rationalisation has encompassed both refinery and distribution terminal networks with the initial trigger being falling market demand following the oil price rise in the aftermath of the first ‘oil shock’ which followed the October 1973 Yom Kippur conflict in the Middle East.

Further streamlining has been prompted by geographical rationalisation of market presence driven by a stronger focus on those areas providing a logistical cost advantage and the pursuit of closer supply alignment; pressure to reduce both working capital and general distribution costs; and recognition that core competency lay in marketing & sales of refined oil products rather than in handling & distribution.

Since the mid 1970s numerous changes have arisen in the number of players, their ownership and identity

1975 Elf acquired the Isherwoods Petrol Company (VIP brand)

1981 Texaco acquired Chevron’s UK interests

1990 Amoco UK acquired by Elf

1995 Burmah’s retail operations acquired by Save – subsequently went into administration with commercial fuels interests acquired by Bayford & Co

1997 Mobil’s European downstream interests merged with BP; Gulf’s UK interests acquired by Shell

1998 Petrofina acquired by Total

1999 Elf acquired by Total

2000 Petroplus acquired Phillips Petroleum’s Teesside refinery and associated commercial fuels business; Chevron acquired Texaco Inc

2002 Conoco merged with Phillips Petroleum to become ConocoPhillips

2007 Petroplus acquired BP’s Coryton refinery

2011 Total divests retail business and Total Butler; Chevron sells UK downstream business to Valero

2012 Petroplus collapses into insolvency; ConocoPhillips splits into separate upstream/downstream entities with UK downstream becoming part of Phillips 66

2015 Murco’s UK interests acquired by Puma Energy

Taking a regional infrastructure tour

During the current millennium the importer/wholesaler companies such as Greenergy, Mabanaft, Harvest Energy/Prax Petroleum and World Fuel Services  have emerged as significant forces in the market place.

When combined these factors have resulted in a dramatically streamlined downstream infrastructure of refineries and distribution terminals.  Below Inside Out looks at the UK’s main geographical regions, highlighting what is still in place and what has closed down since the mid/late 1970s.

NORTHERN IRELAND

Served by three large sea-fed terminals with two in Belfast – BP (formerly a refinery) and NuStar and, one in Londonderry owned by LCC Oil; commissioned in 2006, it is the second largest terminal in Ireland.

CLOSED – Esso (Belfast), Texaco (Carrickfergus) and Shell (Londonderry)

SCOTLAND

Around 70% of requirements are sourced from Petroineos’ Grangemouth refinery (formerly BP) with other points being the adjacent NuStar terminal and another at Clydebank, along with Certas Energy-owned terminals at Aberdeen and Inverness, both formerly BP.

Some requirements are sourced from the Petroineos’ rail-fed terminal at Dalston, near Carlisle. Asco Oils owns and operates two terminals for middle distillates and base oils at Aberdeen and Peterhead.

CLOSED – Esso (Aberdeen and Bowling), Texaco (Aberdeen and Granton) and at Leith Unitank (Nustar).

NORTH EAST

Main distribution points are the Navigator Terminals  – a joint Macquarie Capital/ Greenergy venture established this year – facilities at Seal Sands and North Tees and Inter Terminals’ facilities at Seal Sands and North Shields.

Shell’s closed terminal at Jarrow was acquired earlier this year by Prax Petroleum.

CLOSED – former refineries Shell Teesport and Petroplus Teesside plus four terminals (Texaco, Mobil, Fina and Gulf) at Sunderland and the Esso plant at Tyneside.

NORTH

All distribution emanates from the Humber with two refineries owned by Phillips 66 and Total, and a large, independent storage facility owned by Inter Terminals (Isco).

There are no operational inland terminals after three CLOSURES in Leeds – Total, Shell and Fina plus Conoco (Blackmoor) and Amoco (Carcroft) – both on the CLH system (formerly GPSS) and Shell’s Torksey which was rail-fed and near Lincoln.  The  former Texaco facility at Immingham was acquired by Isco.

NORTH WEST

Four main distribution points – Essar’s Stanlow refinery, Valero’s Manchester Fuel Terminal (on the mainline pipeline), the CLH Bramhall terminal (leased by Phillips 66) and the NuStar Eastham facility.

Shell’s former Workington terminal is now owned by Cumbrian Storage.

CLOSED – Burmah’s Stanlow refinery and three large sea-fed terminals at Ellesmere Port – Gulf, Conoco and Mobil – along with BP Partington, and two facilities at Cadishead – Elf on the mainline system and BTP.

MIDLANDS

Four large facilities principally serve this region – three being at Kingsbury – BP, Valero and WOSL (Total/Phillips 66) – fed from both UKOP and mainline pipelines and by rail at the latter and the Esso terminal at Bromford (Birmingham), which is pipeline-fed from Fawley refinery.

Puma Energy has a rail-fed facility at Bedworth, near Coventry. The east of the region is also served from Total’s rail-fed facility at Colwick, Nottingham while the southern end is currently supplied from BP Northampton on UKOP.

CLOSED – Esso and Texaco at Nottingham both formerly on mainline pipeline, Mobil (Kingsbury), Gulf (West Bromwich) and Conoco (Stourport) formerly on GPSS.

BRISTOL AND HINTERLAND

Served by three facilities with two at Avonmouth – Esso pipeline-fed from Fawley and Valero sea-fed from Pembroke plus one Puma Energy-owned rail-fed location at Westerleigh commissioned by Murco in the early 1980s.

CLOSED –  Shell and Unitank (now NuStar) facilities at Avonmouth and the former MOD terminal at Hallen used by Conoco & Elf.

SOUTH WALES

Distribution is centred in Cardiff with three facilities – Inver Energy, Valero and Prax Petroleum.

CLOSED – Conoco (Cardiff) and four refineries – BP Landarcy and three at Milford Haven belonging to Esso, Gulf and Murco.

Puma Energy converted the Murco refinery into a storage terminal in 2015.

SOUTH WEST

While the northern part is served from Avonmouth, the main distribution point is from Valero and Greenergy facilities at Plymouth. Distillates grades and fuel oil are also supplied from World Fuel Services’ Falmouth terminal.

CLOSED – Former BP terminals at Bridgewater, Falmouth and Yelland (near Barnstable), Texaco (Poole and Exeter) and Conoco at Plymouth (Cattedown Wharf).

SOUTH

Served principally from Esso’s Fawley refinery and currently from BP’s Hamble terminal, with one Puma Energy-owned inland terminal at Theale.

The former Texaco terminal at Shoreham is now owned by Local Fuels.

CLOSED – Esso and Shell (Brighton), Shell (Reading), Total (Langley) and Conoco (Aldermaston) on the GPSS.

EAST ANGLIA

Apart from Asco Oils’ distillates only facility at Great Yarmouth, the area is served out of Immingham in the north and from the south out of the Thames.

CLOSED –  Esso and Shell (Kings Lynn), BP (Great Yarmouth), BP and Esso  (Ipswich), Texaco at Wisbech and Norwich, Conoco (Felixstowe) and BP (Wymondham).

Commissioned in the early 1980s and pipeline-fed from the Thames, Wymondham is now a Goff Petroleum depot.   

SOUTH EAST

Main distribution points are – the Thames at Grays from the Navigator Terminals and NuStar facilities, Purfleet (Esso – pipeline-fed from Fawley), Canvey Island (Oikos Storage – primarily for BP) and at Dagenham (Stolthaven) and from Staines (Esso pipeline-fed from Fawley).

On the site of the former Coryton refinery and commissioned this year, the new Thames Oilport facility is two-thirds owned by Greenergy and one third by Shell.

The northern part of the region is also served from BP Buncefield on UKOP.

CLOSED – three former refineries – BP (Grain), Shell (Shellhaven) and Petroplus (Coryton).  All three terminals in Kent – BP (Northfleet), Conoco/Elf (Cliffe) and Esso (Dover) along with Murco (Grays) and Fina (Fulham).

Disabled by the large explosion at Buncefield in December 2005, the Hertfordshire Oil Storage facility (Total/Texaco) on UKOP and Finaline is only used as batching storage for Jet A-1, principally for Heathrow.   

What next?

After the closure of 11 refineries and 60 distribution terminals over the past 40 years, the extent and magnitude of the UK’s supply infrastructure evolution is very evident.  Six refineries and 48 terminals now service our requirements but do these suffice and has the rationalisation process ended?

Questions around resilience increasingly engage the government’s interest, particularly through the Downstream Oil Industry Forum initiative and its work which was strongly prompted by Buncefield’s disablement.  Despite the loss of this key facility the system and industry coped admirably, retaining an impeccable reputation for ensuring continuity of supply over many years.

The industry’s resilience in the face of further streamlining is a matter for conjecture; the outcome of BP’s decision to divest ownership of three terminals and its share of UKOP will be watched with particular interest.