Lindsey Oil Refinery's Future, impact on rail freight

[Cakestall]

Apologies if anyone has brought this up yet, but Prax who own/operate Lindsey Oil Refinery have gone into receivership. This may leave only four UK Refineries unless a buyer is found and could have a major impact on Freight flows as it appears to be the UK refinery with the largest Rail output.

They had been telling customers at receiving terminals that due to work on the rail network, deliveries were being curtailed.

Coupled with changes at Scunthorpe Steel and the loss of the Total Bitumen flow to Preston, Immingham looks to be entering a fallow patch.

Our two biggest refineries Fawley and Stanlow rely on Pipeline and shipping for distance movements, closure of LOR will leave just Connoco Immingham and Puma Milford Haven. Obviously, other non refining terminals remain for originating product. eg Grain.

 

[55002]

Colas provide the 3 class 70s needed for Lindsey traffic. Two daily services to Kingsbury and one to Jarrow. In addition once a week tanks run to Neville Hill. All must be in doubt although I assume the government may need to get involved, especially so soon after losing Grangemouth. Not entirely sure how anyone can go into administration in the oil business these days

 

[Trainman40083]

Colas provide the 3 class 70s needed for Lindsey traffic. Two daily services to Kingsbury and one to Jarrow. In addition once a week tanks run to Neville Hill. All must be in doubt although I assume the government may need to get involved, especially so soon after losing Grangemouth. Not entirely sure how anyone can go into administration in the oil business these days

Maybe they paid a lot of tax to UK Government. From my time on oil contracts, Neville Hill depot was awkward in some respects.. Not an easy access by road, but capable of handling 102 tonne bogie tankers. Of course, when you reduce production capacity, the fun starts if a remaining refinery closes for necessary maintenance.

 

[Msq71423]

I think this has the potential to rapidly cause a lot of chaos in the next few days, I'm aware no fuel is left at Botanic Gardens.

 

[Trainman40083]

I think this has the potential to rapidly cause a lot of chaos in the next few days, I'm aware no fuel is left at Botanic Gardens.

It is a situation I often had to resolve back in 1989/1990. .Once Grangemouth got oil in their water -) ). Refinery was shut down for weeks, with gas oil railed from Stanlow and Humberside. Nearly ran out of 46 tonne wagons, which is why Neville Hill got 102 tonne tankers.

 

[Freightmaster]

I think this has the potential to rapidly cause a lot of chaos in the next few days...

How long before petrol stations in the Midlands start to run low, I wonder?



MARK

 

[Trainman40083]

How long before petrol stations in the Midlands start to run low, I wonder?



MARK

Government will shrug their shoulders and say "should have bought an electric car"

 

[HSTEd]

Well transport fuel sales are still below 2019 levels (having peaked in 2017) and seem unlikely to ever reach those heights again.
Given falling local oil production, I don't think it is surprising that UK refinery capacity is closing down.

Aviation, shipping and chemicals will probably only sustain a small fraction of existing capacity in the long term.
Not really much of a long term future in the UK Refinery industry.

 

[Trainman40083]

Well transport fuel sales are still below 2019 levels (having peaked in 2017) and seem unlikely to ever reach those heights again.
Given falling local oil production, I don't think it is surprising that UK refinery capacity is closing down.

Aviation, shipping and chemicals will probably only sustain a small fraction of existing capacity in the long term.
Not really much of a long term future in the UK Refinery industry.

Add in labour and energy costs, probably more cost effective to bring fuel from somewhere else.

 

[hwl]

Well transport fuel sales are still below 2019 levels (having peaked in 2017) and seem unlikely to ever reach those heights again.
Given falling local oil production, I don't think it is surprising that UK refinery capacity is closing down.

Aviation, shipping and chemicals will probably only sustain a small fraction of existing capacity in the long term.
Not really much of a long term future in the UK Refinery industry.

Add in labour and energy costs, probably more cost effective to bring fuel from somewhere else.

Three key questions
1) where was the crude being sourced from (Lindsey is interesting from UK, European and Global refinery view points in that is has very flexible on the origin of the crude as it can adapt far better than most refineries to different crude sources (there are / have been big problems in central europe as many of the former eastern block refineries were set up for Ural crude and closer to home Grangemouth was originally set up for Caribbean crude grades and never really properly adapted to North Sea grades).
Most of the recent crude (including two tankers that are yet to arrive) appears to have been Texan supplied by Glencore, but where did it used to come from?.

2) where are /were they getting the natural gas for the hydrotreatment from? (Russia/Gazprom until recently? if so their cost will have gone through the roof)

3) did they have high sales of certain products to problematic customers (e.g. were they shipping lots of petrol to the US (which has become more self sufficient in recent years, the US has traditionally been short on petrol and had surplus diesel to export e.g. to Milford Haven some of which goes onwards by train), were they shipping lots of Jet A1 to Russia before 2022 (yes)

 

[StanFromEccles]

A deal has been met to keep oil running out of the site for another 3 weeks

 

[duffield]

So is this likely to be another Scunthorpe situation, with the government arranging some sort of last minute rescue?

 

[Trainman40083]

So is this likely to be another Scunthorpe situation, with the government arranging some sort of last minute rescue?

You start wondering if this is the new thing. Government actions adversely affecting big industry so that it goes bust. It then gets a Government handout to keep going to stop them making people redundant...

 

[duffield]

You start wondering if this is the new thing. Government actions adversely affecting big industry so that it goes bust. It then gets a Government handout to keep going to stop them making people redundant...

I don't see anything above to indicate that the government has precipitated this specific issue by its actions.

Indications seem to be that the owners overloaded it with debt
Quote:

By Friday of last week, ministers had been informed that Prax could not pay its debts – including sums owed to HM Revenue and Customs that the Financial Times reported had reached up to £250m – and was headed for insolvency. The shock update put 625 jobs at risk and sent officials scrambling to keep the refinery going. By Monday, administrators had been called in.

Quote:

Multiple sources, including former staff, described a house of cards stacked on increasingly unstable foundations due its owners’ insatiable thirst for debt-fuelled growth, building an empire which included the refinery, trading in oil and petrol stations.

There's a lot more in this lengthy analysis, but it sounds like the owners essentially ruined the business.

Link:

‘The bubble had to burst’: the inside story of the Lindsey oil refinery collapse

Prax Group’s sudden demise surprised some, but others saw ‘a house of cards’ built on a thirst for debt-fuelled growth

www.theguardian.com

 

[StanFromEccles]

You start wondering if this is the new thing. Government actions adversely affecting big industry so that it goes bust. It then gets a Government handout to keep going to stop them making people redundant...

Almost like they want it to be a 'publicity stunt' with them swooping in to save the working class

 

[duffield]

Almost like they want it to be a 'publicity stunt' with them swooping in to save the working class

The extensive well researched article linked above shows the owners basically destroyed the business themselves by loading it with massive debts debts (amongst other bad moves). So the whole premise that the government caused it to fail so it could rescue it appears to have no factual basis whatever.

If you don't believe the Guardian, The Financial Times has a similar article.

Note the "several years" - i.e. pre-dating the current government.

Quote:

Collapsed owner of Lindsey oil refinery owes up to £250mn in taxes
Prax Group faced liquidity issues for several years leading up to its unravelling

Link:

Collapsed owner of Lindsey oil refinery owes up to £250mn in taxes

Prax Group faced liquidity issues for several years leading up to its unravelling

www.ft.com

 

[StanFromEccles]

The extensive well researched article linked above shows the owners basically destroyed the business themselves by loading it with massive debts debts (amongst other bad moves). So the whole premise that the government caused it to fail so it could rescue it appears to have no factual basis whatever.

If you don't believe the Guardian, The Financial Times has a similar article.

Note the "several years" - i.e. pre-dating the current government.

Quote:

Link:

Collapsed owner of Lindsey oil refinery owes up to £250mn in taxes

Prax Group faced liquidity issues for several years leading up to its unravelling

www.ft.com

Just proves there's always 2 or more sides to a story I suppose

 

[AndrewE]

I read somewhere that UK demand for liquid fuels is dwindling anyway, so we shall not need the refinery capacity in future.
Of course it is bad news for the employees, and it's disgusting that the owners can siphon money out in the short term just before busting the company - leaving HMRC and other creditors in the lurch. Corporate governance in the UK is appalling, but the powers-that-be don't seem to care, even when the money being siphoned away could be supporting the country's infrastructure instead.

 

[HSTEd]

Road fuel demand in the UK is falling and is likely to keep falling.

The government may want to prop up this refinery for the sake of some headlines, but it is the smallest remaining refinery and probably was in the worst position, even before Prax got hold of it.

 

[Freightmaster]

Road fuel demand in the UK is falling and is likely to keep falling.

The government may want to prop up this refinery for the sake of some headlines, but it is the smallest remaining refinery and probably was in the worst position, even before Prax got hold of it.

The fact that despite no trains having run from Lindsey to Kingsbury in the past ten days or so
(when normally around 16 trains conveying over 400 bogie tanks would have run) but there are
no headlines in the press reporting petrol stations running out of fuel must mean that Lindsey
wasn't the predominant source of petrol/diesel to the West Midlands that I always presumed it was...



MARK

 

[Donny Dave]

The fact that despite no trains having run from Lindsey to Kingsbury in the past ten days or so
(when normally around 16 trains conveying over 400 bogie tanks would have run) but there are
no headlines in the press reporting petrol stations running out of fuel must mean that Lindsey
wasn't the predominant source of petrol/diesel to the West Midlands that I always presumed it was...



MARK

Not the West Midlands, but a lot closer to the refinery....

Lincolnshire garages run out of petrol after supply issues

The garages in Ulceby Cross, Partney and Bilsby ran out of unleaded on Thursday.

www.bbc.co.uk

The owner of three petrol stations says his garages have run out of a fuel as a result of an oil refinery going into administration.

Tom Dant of Gill Marsh Forecourts said all three of his sites at Ulceby Cross, Partney and Bilsby in Lincolnshire ran out of unleaded petrol on Thursday.

The government said an agreement had been reached to keep the Lindsey refinery at Immingham operating and resume deliveries despite filing for insolvency on 29 June.

The Petrol Retailers Association (PRA) acknowledged there may be delays to deliveries and advised motorists to "shop around".

 

[Cakestall]

The fact that despite no trains having run from Lindsey to Kingsbury in the past ten days or so
(when normally around 16 trains conveying over 400 bogie tanks would have run) but there are
no headlines in the press reporting petrol stations running out of fuel must mean that Lindsey
wasn't the predominant source of petrol/diesel to the West Midlands that I always presumed it was...



MARK

Kingsbury is on the main product pipeline between Mersey and Thames. Also Esso Birmingham is pipeline fed from Fawley

 

[D1537]

There have been unleaded petrol shortages in the Yorkshire Dales over the weekend which the station owners have said is linked to the issues with Prax.

 

[Macwomble]

So is this likely to be another Scunthorpe situation, with the government arranging some sort of last minute rescue?

....which will go down like the proverbial lead balloon in Scotland given the government refused to intervene at Grangemouth

 

[m0ffy]

Lindsey is also on the BPA pipeline system, connected to Buncefield on the ‘Fina’ line. Both locations were important facilities for Total S.A. before their departure from the UK market following the Buncefield fire.

 

[mpthomson]

Just proves there's always 2 or more sides to a story I suppose

Or that there's the truth and a made up conspiracy theory based on no facts whatsoever...

 

[StanFromEccles]

Or that there's the truth and a made up conspiracy theory based on no facts whatsoever...

What's the conspiracy?

 

[Lytham Local]

Didn't Lindsey Oil Refinery have a tar run to Preston docks until recently?

 

[Gerald Fiennes]

Lindsey is in Administration, presumably, so it can still operate whilst buyers/new finance are/is found? If it turns out that there is an absence of either, then the company would be wound up, with Lindsey either being sold separately by the Administrators or shut down. The reports of low levels of shipment suggest that the plant has been running at reduced or reduced output for some time before the news about Administration emerged?

 

[swt_passenger]

There have been unleaded petrol shortages in the Yorkshire Dales over the weekend which the station owners have said is linked to the issues with Prax.

Small filling station in Fridaythorpe had no petrol today, it was an unfamiliar brand to me, (JB?), and may have been Lindsey supplied?