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Inside an Industry - Coryton Oil Refinery Notes for 'A' Level Students |
Oil refining is an example of secondary industry. It is a large-scale heavy manufacturing industry. Specifically, it is a processing industry. That is, a raw material (crude oil) is processed into useable products (petrol, diesel, motor oil, grease, etc). It is capital intensive due to the need for a very large processing plant. In the past oil refining was quite labour intensive but in recent years the number of people employed has declined due to technological advances and automation. Although there are 1040 people employed at Coryton refinery, they are not all there at one time. Most employees work shifts since the refinery is in operation 24 hours a day. The refinery is owned and operated by BP, one of the world's largest transnational companies. It is thus part of a worldwide network.
Coryton refinery is in Essex in the borough of Thurrock which lies immediately east of London on the north bank of the Thame Estuary. 35% of the UK population and 30% of UK industry and commerce are with 150km of Thurrock. A huge swathe of land from Tower Bridge in London eastwards along both the north and south banks of the Thames Estuary, including Thurrock, as been designated for regeneration and business support. Called Thames Gateway, this is a major regeneration initiative which receives funding from both the UK government and the European Union. A major objective of the Thames Gateway partnership is training because changes in industry have led to a mismatch between the skills of the local labour force and those required by local businesses. This area includes the site of the Millenium Dome in Greenwich. It was hoped that by redeveloping the Greenwich peninsula, spearheaded by the Dome, business and employment would be generated.
The southern part of Thurrock, fronting the Thames, has traditionally been an area of manufacturing, the cement industry, transport and distribution. Oil refining, petrochemicals, port activities, paper board, margarine and soap making, distribution and retail are currently important local industries. Primary industry was once important (chalk quarrying and gravel extraction) but very little remains. Due to the availability of chalk, the cement industry was once very important locally but now only very small-scale operations remain. However, there are many disused chalk pits. The Lakeside shopping centre was built in a former chalk quarry (as was Bluewater across the estuary in Kent). Immediately east of Lakeside is Chafford Hundred, a new residential development for 5000 homes, shops, schools, etc, also a former quarry site. The Thames Gateway area is traditionally where power is generated for London and where much of London's refuse is buried (brought down the river on motorised barges). In Thurrock, there are large areas of landfill sites, former chalk and gravel pits and derelict land. As a consequence, 58% of the borough of Thurrock has been designated as "Landscape Improvement Areas". This means that they are in need of remedial action to improve the environment. Employment in secondary industry in Thurrock has declined dramatically, by 51% between 1981 and 1993. An example of the decline in secondary industry is the closure of the Shell Haven oil refinery that lies immediately to the west of Corython refinery (OS map grid squares 7281, 7282, 7381, 7382 and 7481). Shell Haven closed in December 1999 and it is to be re-developed as a major port facility by P&O. However, at the same time as employment in secondary industry has declined, jobs have been created in tertiary industry. Unemployment in Thurrock is on a downward trend. In 1998, unemployment was 4.5% compared to 5% in the UK as a whole. More than 60% of local people work in Thurrock and 27% in London.
The deep water channel of the Thames makes this area accessible by fully loaded ships of up to 100,000 tonnes capacity. Very large crude carriers (VLCCs) of up to 250,000 tonnes capacity also come up the estuary to Coryton but not fully loaded. They typically unload a large part of their cargo at Rotterdam or to lighters in the North Sea before proceeding to Coryton. The container port at Tilbury west of Coryton became very important when the London docks closed down due to containerisation and because the dock entrances were too small for large modern ships. A container termail needs a lot of road links, especially the limited number of river crossing points. However, road improvements have had a major positive effect on industry in the area. These improvements are the construction of the M25 London orbital motorway through Thurrock and the construction of the Queen Elizabeth II Bridge over the Thames, together with the M20 to Dover, Folkestone and the Channel Tunnel and the upgrading of the A13. The effect has been to encourage the construction of many warehouses and distribution centres and the Lakeside regional shopping centre. The possibility of the new Channel Tunnel rail link being routed through the borough has also encouraged development.
The site of the refinery was farmland until 1985 when it was bought for the construction of an explosives factory at a time when war in South Africa was expected. The explosives factory closed in 1919 and in 1923 was bought by the Cory brothers for oil refining and storage. During and just after the Second World War it was also used for storing vegetable oils. In 1950 it was bought by the company that later became Mobil Oil for the construction of a large oil refinery. The first cargo of crude oil arrived from Kuwait in December 1952 and the refinery became fully operational in January 1953.
The site on an estuary with a deep water channel for shipping is a classic example of the location of processing industries. Raw materials are brought in by ship, unloaded at the refineries own jetties and immediately processed. This is thus a "break of bulk" point. Some finished products are then also transported out by ship, both by coastal vessels to other UK sites and as expoerts to other countries. At Coryton, the most easterly jetty extends further out into the deep water channel than the other four jetties. It is used for the unloading of VLCCs (very large crude carriers). A particular feature of this site is that it is a peninsula. Being surrounded by water on three sides made it ideal for the original explosives plant because of safety issues. For the refinery, it means that there is a long water frontage for jetties and for water intakes and outlets. Large quantities of water are required for cooling. The land is extremely flat which is essential for construction of a large plant of this type. Installation of huge oil storage tanks and vast processing towers with pipelines connecting them all together requires a level surface. The natural vegetation is marshland but much of the area has been drained so that it can be used for both grazing and arable farming. There is a Site of Speical Scientific Interest (SSSI) on the Fobbing Marshes nearby (OS map gride square 7284) and BP have supported a project to protect and enhance the fauna and flora by the control of water levels.
Externalities are the costs and benefits of an industry to those outside the industry. For example, by employing more than a thousand people, Coryton refinery has a positive benefit on local businesses where employees spend their incomes. It is estimated that the refinery supports indirectly about 2300 jobs in the local community and puts about £50 million a year into the local economy. The principal negative externality is air pollution. The Environment Agency issues licenses for the refinery to release given amounts of gases to the atmosphere each year and does spot checks to ensure that these are adhered to. By far the largest waste gas in carbon dioxide. Tall chimneys help to disperse waste gases rapidly. Details on these emissions are available at www.environment-agency.gov.uk. Coryton also has two water outfalls. However, water pollution is prevented by a refinery moat system that collects all surface runoff for treatment prior to discharge into the Thames and by the treatment of all cooling water before it is discharged into Holehaven Creek.
BP is a vertically integrated company. This means that it is involved in all stages of the oil industry from exploration for oil and gas through production and refining to retail sales. For this reason, backward linkages, the supply of raw materials, are mostly within the company. However, the refinery also buys oil from other companies. 60% of oil refined at Coryton is from the North Sea, 40% is imported. Most imports are crude oil but some are partially processed oil from other refineries that do not have higher level refining facilities. The source of raw materials has shifted over the years. Originally, most came from the Middle East but since oil was first produced from the North Sea in 1975 Britain has had to import less and less. The UK is now self-sufficient in oil but still imports because the refineries buy at the best price available at any one time and because crude oil varies in composition. This change in the soruce of raw material has not affected the location of refineries because almost all of Britain's oil is found under the North Sea and has to be brought ashore by tanker or pipeline. All Cortyon's raw material is transported by ship. This is typical of Britain's refineries although Grangemouth refinery in Scotland receives its oil by pipeline from the North Sea. See the "Interactive Guide to UK Refineries".
Forward linkages are the supply of finished products to customers. 90.5% of Coryton's output is comprised of fuels. BP supplies its own service stations with petrol by road tankers. Tankers serving the local region fill up at Coryton. Those further afield are supplied by pipeline to terminals where the tankers fill up. Coryton also supplies aviation fuel (kerosene) to both Heathrow and Gatwick airports by pipeline. Coryton also produces fuel oil, much of which is sold as bunkering fuel to ships coming up the Thames Estuary. This is taken by motorised barge to the ships as they lie at anchor off Southend. Non-fuel products are bitumen (used for tarring roads etc and collected by tanker) and lubricants and wax. See Figure 13 and the section "Products and Distribution" for more details. Figure 12 gives the movement of raw materials and products in and out of Coryton's jetties on one particular day. This illustrates the range of sources of raw materials (backward linkages) and destinations of products (forward linkages).
Since oil refining is a processing industry horizontal linkages are not significant in comparison to backward and forward linkages although they are very important to the local community. Horizontal linkages include the supply of materials and services (much by local companies), for example, machinery hire, printing and training providers.
Processing industries in general have declined in the UK. Until the 1950's there were many processing industries along the Thames in London's Docklands, for example, sugar refining and flour milling. There are still some processing industries besides oil refining but these are now located further downstream on the Thames Estuary. For example, vegetable oil is refined and made into margarine in Thurrock (sse "Transport Links" above). The former industrial sites in London's Docklands have been converted to high quality residential sites and office complexes.
The total capacity of all UK oil refineries declined slightly through the 1990s due to the closure of some refineries. The latest closure was that of Shell Have, adjacent to Coryton on the west side, in December 1999. However, total capacity has reduced less than that lost by closures because existing refineries have increased their efficiency. The reduction in the number of refineries in the UK is due to a combination of factors:
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