In 2007, Caltex’s two refineries achieved record production and utilisation rates although constrained by technical problems at the end of the year. Both refineries demonstrated that higher rates can be achieved and sustained.
Refiner margins were lower with the Caltex refiner margin averaging A7.0 cents per litre (US$9.26 a barrel) in 2007, compared with A8.44 cents per litre (US$10.13 a barrel) in 2006 as the higher Australian dollar in 2007 lowered earnings gains from the US dollar denominated refiner margin.
High priority was given to improving safety culture and there was a focus on risk management and reliability projects.
Production and utilisation
Production of all products for the year was a record 12.1 billion litres (2006: 11.9 billion litres). Production of high value transport fuels (petrol, diesel and jet fuel) was 10.9 billion litres, up from 10.2 billion litres in 2006. However, production was slightly lower than anticipated due to unscheduled unit shutdowns for essential repair and maintenance work at both the Kurnell (Sydney) and Lytton (Brisbane) refineries in November and December.
Both refineries operated at near record throughput rates during the year, together achieving record average utilisation of 84% (2006: 78%). New throughput records were set for the catalytic cracking units at both refineries and the crude distillation units at Kurnell.
Planned shutdowns in 2008 will have an impact on refinery production in the first half of the year, but the company is on track with refinery projects that will increase production capacity of high value transport fuels outside major maintenance periods to 1 billion litres a month by 2010.
Major projects
A second diesel hydrotreater unit (DHTU) is under construction and on track for completion in the first quarter of 2009. Globally, capital costs continue to rise due to the tight availability of skilled labour and materials cost increases. Independent data shows capital costs in the refining industry generally have risen by more than 60% over the last three years. Caltex is experiencing similar cost pressures for the Lytton DHTU with final costs currently anticipated to be around $320 million. This compares with the initial estimate for the project of approximately $250 million. When commissioned the unit will increase Caltex’s capacity to produce extra low sulfur diesel (maximum 10 parts per million sulfur) by 40%.
A new 18 megalitre diesel storage tank was commissioned at Kurnell in January 2008 and is currently providing valuable intermediate diesel storage during a maintenance shutdown of the Kurnell DHTU and sulfur recovery unit. It has effectively increased diesel storage at the refinery by 26%.
An 88 megalitre capacity crude oil storage tank now under construction is scheduled for completion in May 2008. When completed it will be Caltex’s largest tank and will add an additional 40% capacity to the Kurnell refinery’s crude storage facilities. The new crude tank will assist in maximising plant utilisation by enabling the refinery to better manage fluctuations in the timing of the delivery of crude oil affected by weather delays or shipping from more distant oil fields.