USA

Blaze shuts Chevron Bay Area refinery; gasoline spikes

RICHMOND, California (Reuters) – A fire that shut Chevron Corp’s Richmond plant, the second-largest refinery in California, was extinguished early on Tuesday as fears of a months-long closure caused a 25-cent spike in regional gasoline prices.

The fire that spewed flames and a column of smoke high above the densely populated industrial suburb of east San Francisco Bay shortly after 6 p.m. local time on Monday was contained by 11 p.m. and then extinguished, Chevron said. Officials have allowed a small controlled burn to continue, the firm said.

As traders recalled a similar fire on the same unit in 2007 that left the plant mostly idle for over three months, Los Angeles benchmark gasoline rates spiked nearly 25 cents, driving up the price of the nation’s costliest motor fuel and delivering a margin boost for competing refiners who may rev up rates. Diesel premiums rose 6 cents from Monday, brokers said.

The 245,000-barrels-per-day (bpd) plant, which accounts for one-eighth of California’s refining capacity, was reported to be completely shut down, and could remain so for up to three months, trade sources estimated. It was in the midst of marking its 110th anniversary this summer.

“Safety officials are allowing a small controlled burn as a safety measure to reduce pressure. This is helping to ensure more hydrocarbons don’t escape,” Chevron spokesman Lloyd Avram said.

An order for more than 100,000 nearby residents to remain indoors had been lifted, and local transit stations had reopened, authorities said. About 200 people have sought medical help, complaining of respiratory problems, the San Pablo, California-based Doctors Medical Center said.

In Richmond, where residents have long lived in the shadow of one of the oldest refineries in the United States, some wondered if it would sharpen debate between residents, who worry about the environmental impact of the plant, and politicians who often seek more tax revenues for the declining industrial city.

“Where is everyone?” asked Mohammed Abolghasem, the Iranian-born owner of Cafe Altura in nearby Point Richmond, as he looked across the street at a bar that was closed early on Monday evening while sirens blared and helicopters swirled overhead.

Abolghasem said that when he was growing up in Iran everyone knew not to live near refineries, and he was now wondering whether he should move. “I love living in this city,” he said. “It’s beautiful. But next to a refinery, what do you expect?”

Richmond mayor Gayle McLaughlin said she would seek a full investigation by Chevron and independent sources.

CRUDE UNIT

The fire had started in the No. 4 crude unit, the only one at the plant, at 6:15 p.m. shortly after a leak was discovered, Chevron said. As the leak grew, workers were evacuated, plant manager Nigel Hearn told journalists at the site.

He said some units were still operating, but gave no details. The company said there had been only one injury, which it described as minor, among workers.

The extent of damage to the plant was not immediately clear. KGO-TV said online that the plant had shut all production, which is common in cases of major fires.

The impact on markets now depends on the duration of the closure. A February 17 fire at the CDU of BP Plc’s 225,000-bpd Cherry Point, Washington refinery led to a three-month shutdown and sent the regional price premium to more than $1 a gallon in some places.

Any lengthy disruption in production could affect the supply of fuel on the West Coast, particularly gasoline, due to the difficulty in meeting California’s super-clean specifications. The region also has few immediate alternative supply sources.

“Chevron will have a hard time finding replacement barrels in an already short market,” said Bob van der Valk, a petroleum industry analyst in Terry, Montana.

“Refineries are already drawing down summer-blend inventory in anticipation of the switch back to winter-blend gasoline.”

Crude distillation units break down oil into feedstock for other units in a refinery. It can take months to repair a CDU at a large plant, during which operations are typically severely limited.

Local residents had been advised to “shelter in place,” an order often given during refinery accidents to shield against possible exposure to toxic chemicals or smoke. Sulfuric acid and nitrogen dioxide were released during the incident, according to a filing with the California Emergency Management Agency.

(Additional reporting by Erwin Seba and Kristen Hays in Houston, Janet McGurty in New York; Editing by Maureen Bavdek and Dale Hudson)

 

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