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Secrecy surrounds Suncor’s shutdown, but experts say it’s a sign the company’s invested in Commerce City

Posted on January 13, 2023 by

Suncor Energy’s operations at its Commerce City refinery are shrouded in secrecy after a Dec. 21 malfunction forced the plant to close for up to three months, but industry experts say the closure signals that Suncor intends to do business in Colorado for the long term.

Meanwhile, the secrecy surrounding Suncor’s malfunction, triggered by extremely cold weather, and the following shutdown concern people who live near the refinery. They are worried about the pollution that may be released as the company brings operations back online over the next three months.

While Suncor has said the refinery won’t be fully operational until the end of March, work at the site is ongoing as crews repair damaged equipment and work on maintenance to machinery used to make gasoline, diesel, jet fuel and asphalt. In a statement, Suncor said neighbors will see flaring and hear noise related to its operations.

“There’s trucks. There’s movement. You wouldn’t know it was closed,” said Olga Gonzalez, executive director of Cultivando, a community organization that monitors Suncor’s pollution.

Cold weather can threaten operations at an oil refinery — even one operating in the Rocky Mountains where winter freezes are expected — but typically refineries come back online within a week after a weather shutdown, industry experts said. However, Suncor, which serves as Colorado’s only in-state gasoline producer, will take months to return to full production capacity, and the shutdown has put a squeeze on fuel supply and costs across the state. Suncor’s Commerce City plant refines 98,000 barrels of crude oil a day, producing 35% to 40% of all the gasoline used in Colorado.

But the plant is controversial because it’s a large polluter, releasing chemicals into the air that can cause asthma and other breathing problems, and it’s facing mounting pressure from environmentalists to better control its air emissions. Since the closure was announced, the plant continues to release pollutants such as hydrogen sulfide and sulfur dioxide, according to malfunction reports submitted between Dec. 21-29 to the Colorado Department of Public Health and Environment’s Air Pollution Control Division.

Suncor first shut down units around 8 p.m. on Dec. 21, according to the filings.

Hours earlier Denver’s temperatures took a drastic plunge, dropping 37 degrees in one hour. The National Weather Service says the fast freeze is on record as the third largest one-day temperature change since 1872 with a high of 51 and a low of -10.

Suncor reported that the cold weather tripped its hydrogen plant, forcing the unit to shut down and creating a cascading effect throughout the refinery, according to the Air Pollution Control Division.

A hydrogen plant is critical to any refinery operation, said John Jechura, a Colorado School of Mines professor of practice who teaches a refining class. Hydrogen is necessary to pull out sulphur during the refining process to make gasoline, diesel and jet fuel.

“If the hydrogen plant goes down, you can’t process anything else,” said Jechura, who emphasized that he did not have any inside knowledge about what happened at Suncor. “It can force you to take your refinery down.”

Thus far, Suncor Energy’s public relations staff has declined to provide further details about the shutdown, what caused it and what the plan for restarting will be. In an emailed statement, Loa Esquilin Garcia, a company spokeswoman, said the refinery experienced equipment damage and managers decided to put it in “safe mode” to inspect all units and repair damages.

Matt Kimmel, a principal analyst at the global energy research and consulting firm, said the lengthy shut down indicates one or more pieces of critical equipment was damaged by the deep freeze.

“Typically, the outages only linger if you have significant freeze-related damage to your units, which is what Commerce City is basically admitting to,” Kimmel said. “They’ve got some sort damage that’s going to take a long time to repair. They’re probably still assessing whatever damage occurred from the extreme cold, which is why the timelines are somewhat uncertain.”

The public first learned about Suncor’s troubles in the wee hours of the morning on Dec. 22 when the company broadcast two messages through its Everbridge emergency alert system. The messages warned of a malfunction that forced the company to bring down several units. No injuries were reported, the messages said. There were no warnings about harmful pollutants being released.

However, the state would later confirm that Suncor reported excess emissions of hydrogen sulfide and sulfur dioxide as well as smoke during that malfunction.

By the afternoon of Dec. 23, Suncor told the state that some of its units remained shut down while others were operating at a minimal rate.

The next day — Christmas Eve — Suncor management decided to completely shut down the refinery, but it would not notify the public or its investors until Dec. 28.

By then, the refinery had reported two fires, including one on Dec. 24 that injured two workers. The U.S. Occupational Safety and Health Administration opened an investigation into the fire but will not provide information until it is completed, said Juan Rodriguez, an OSHA spokesman in the agency’s Dallas office. Those investigations take up to six months.

Suncor has not provided an update on its injured employees.

A view of the Suncor Energy oil refinery in Commerce City, Colo., on Nov. 23, 2020. (Rachel Ellis/Denver Post file)

A profitable plant

The secrecy is not surprising, Kimmel said. His firms monitors refinery stops and starts across the United States by using infrared technology to see what’s happening since the companies are tight-lipped.

“Typically, they won’t highlight what the issues are,” Kimmel said. “That’s to protect their market reputation as well as their own trading strategies because they’ll still be active in that space even if their refinery isn’t running.”

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As for the company’s finances, the quarterly closure will be costly but not financially devastating.

A three-month closure in Commerce City likely would cost the company $300 million, Kimmel said. But in the third quarter of 2022, the company’s earnings were about $4 billion.

“It takes a chunk out of their profitability, but it certainly is not going to sink Suncor’s business,” he said.

Suncor’s Commerce City refinery ranks in the top 5 most profitable refineries in the United States, according to Wood Mackenzie’s rankings.

Suncor’s location in the Rocky Mountains gives it access to cheap crude from Canada and the western United States. It’s a large complex, and as the only refinery in Colorado, it dominates the market, Kimmel said.

“Suncor has all the reason in the world to invest in that refinery and keep it reliable,” Kimmel said.

Still, Suncor’s stock dipped on Wednesday after Wells Fargo analysts downgraded its value to an average performer, citing the Colorado refinery’s shutdown signals operational challenges within the company. The report said, Suncor’s “cultural challenges to embrace safety and available uptime run deeper than a new CEO or modest restructuring of the company’s operations.”

A Suncor Energy employee works at Plant 2 of Suncor’s refinery in Commerce City, Colorado, Wednesday, June 15, 2022. (Photo by Jintak Han/The Denver Post)

Deep freezes damage refineries

Just like the plumbing in a house, a refinery’s system of pipes is vulnerable to a freeze.

In February 2021 a polar vortex brought extreme cold to the United States that lingered for five days, leading refineries in Texas, Louisiana, New Mexico, Oklahoma and Tennessee to shutter for several days. Those refineries accounted for a third of all U.S. refining capacity, Reuters reported.

Power outages during that deep freeze caused abrupt shutdowns that refineries were slow to recover from, Rick Joswick, head of global analytics at S&P Global Insights, said in a Dec. 23 report on the most recent cold. But this time power outages were kept to a minimum and restarts were easier.

This time, during the December cold snap, refineries around the United States again shuttered. Outages in the Rocky Mountain, Mid-continent and Gulf Coast regions accounted for a loss of just below 3.1 million barrels per day, Kimmel said.

But 60% of those refineries were operating again by Jan. 6, he said.

A refinery involves hundreds of miles of pipeline where crude oil is pumped into machinery that extracts impurities using very hot temperatures and chemicals to turn it into usable fuel. Refineries also use a lot of water to cool products so there is plenty of liquid is surging through the system at all times.

Suncor’s Commerce City refinery has three operating plants. Plants 1 and 2 make gasoline, diesel and jet fuel while Plant 3 produces almost all of the asphalt used to pave roads in Colorado.

Even though weather forecasts predicted rapidly dropping temperatures that reach subzero, there’s not a lot Suncor employees could do in advance to prevent damages, Kimmel and Jechura, the Mines professor, said.

“A shut-down and start-up depends on whether they think they can power through,” Jechura said.

Jechura said it is possible that the swift and severe drop in temperatures on Dec. 21 may have caused problems at Suncor. Frozen pipes certainly would cause production to stop.

Kimmel, who formerly worked at a refinery, said it can be more to power down ahead of time. If a refinery ends up with stagnant water in pipes, they can burst. It’s a similar principle to the advice homeowners are given to keep their faucets running during freezing weather.

“There’s not a lot you can do,” Kimmel said. “Particularly, a plant in Colorado is already going to have the best winter proofing and heat tracing on all of their systems that they can.”

A refinery doesn’t come back to life with the flip of a switch. Typically, a single processing unit — without damages — takes about a week to come back online.

Since Suncor has not disclosed what equipment might have been damaged or which parts of the refinery might be undergoing maintenance, it’s hard to predict exactly how long it will take to restore the plant to full operating capacity.

In Garcia’s statement on behalf of the company, she wrote the company does not provide updates on day-to-day work but said the refinery remains in safe mode. That means the company has reduced its oil supply and de-pressurized its equipment to make it safer to work on during the repairs

Suncor will need to figure out which processes to start first — likely the first step of separating impurities from the crude oil — Jechura said.

The company likely will pick one of its three plants to restart first. But no matter what, it won’t be fast, he said.

“Usually, it’s well planned as to how quickly you heat the equipment,” Jechura said. “It’s a balancing act. Kind of a dance.”

Meanwhile, the repairs and maintenance will make the Suncor campus a busy place. People and vehicles will be coming and going. Steam will be rising from machinery. And flames will continue to shoot from smokestacks.

Flames rise from a smokestack at Suncor’s Commerce City oil refinery on Tuesday, Jan. 3, 2023. (Photo by Hyoung Chang/The Denver Post)

Pollution won’t pause

Those flames are one thing that concerns environmentalists and people in the surrounding neighborhoods.

They are the result of flaring — a process used to burn off excess gases and a source of air pollution.

As Suncor tests its equipment and prepares for a restart, it likely will run crude oil through the system to make sure fluids are flowing, Jechura said. But because Suncor won’t be making usable fuel and asphalt, materials will need to be recycled and excess gasses released.[

“Flares at a refinery are usually for an emergency and non-normal operations where you cannot contain what you make,” Jechura said.

But those flares mean Suncor is polluting.

Since Dec. 21, Suncor has filed 10 notices with the state Air Pollution Control Division to report that it has exceeded limits set in a permit regulating the plant’s emissions. All the reports said the releases started on Dec. 21 and all listed the end date as ongoing.

As of Dec. 29, Suncor’s reports say that the amount of sulfur dioxide released is still under evaluation, according to the malfunction reports. Sulfur dioxide is a toxic gas that can cause breathing problems, especially among children who have asthma. It also can damage plants and trees, and once in the air, it can combine with other compounds to create a haze.

The flaring also has released hydrogen sulfide above acceptable limits spelled out in Suncor’s permits, the malfunction reports state. That compound also can cause breathing problems and can irritate people’s eyes, noses and throats.

Steam rises from Suncor’s refinery on Feb. 10, 2021. (Photo by Andy Cross/The Denver Post)

But in its only public statement since the Dec. 21 malfunction, Suncor said ongoing air quality monitoring is happening and so far no data had indicated “any acute public health concerns.” The Air Pollution Control Division also has said those two toxins are below levels that should cause immediate health concerns.

Garcia said in her statement to The Denver Post that the ongoing flaring is within it’s permitted emissions limits and the company continues to monitory air quality around the plant through its third-party service.

The Air Pollution Control Division also says it is investigating the malfunction and emissions released during it. The state could take action against Suncor, but past instances of any enforcement are slow to resolve.

In 2020, the company agreed to a $9 million settlement to resolve multiple violations that had been found since 2017.

But Gonzalez at Cultivando said she and others in the community wonder about the long-term cumulative effects of pollution released by Suncor.

“They might say it’s not really harmful based on our monitoring but for people who’ve lived there for decades, what’s happening with the cumulative health effects?” she said.

In the days after the shutdown was announced, many people were hopeful it meant no pollution would be generated in the coming months. They saw it as an opportunity to compare Denver’s air quality before the shutdown, during and after.

But that may not be possible since Suncor will have ongoing work that likely will create air pollution over the next three months.

A consultant who works with Cultivando on the air monitoring advised Gonzalez not to expect zero pollution during the shutdown, especially since Suncor has said there will be flaring.

“It’s not as cut and dry as everything is closed and everything is fine,” Gonzalez said.

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Adams County – The Denver Post

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