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Chevron partly running Richmond refinery after fire

08.08.2012  | 

Chevron said it was running most processing units. But how long and at what rate the company could keep making fuel at the 245,000 bpd plant was an open question, because Monday's fire damaged the plant's only crude distillation unit, a critical component of the fuel-making process.

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By BEN LEFEBVRE

Chevron said Wednesday it is running most of the processing units at its refinery in Richmond, Calif., after a fire erupted at the plant's crude distillation unit, but it was unclear how much fuel the facility was producing.

“Other parts of the refinery continue to operate,” Chevron spokesman Sean Comey said. “We're working hard to get the impacted equipment up and running as soon as we safely can.”

How long and at what rate the company could keep making fuel at the 245,000 bpd plant was an open question, however, because Monday's fire damaged the plant's only crude distillation unit, a critical component of the fuel-making process.

The unit processes crude oil into different cuts that are the source of diverse types of fuel; without it, Chevron would have to buy semi-processed crude in order to feed the rest of the refinery.

“Most of the other units are still running,” said a person familiar with the refinery's operations. “But it's tough to run without your main unit.”

An extended shutdown of the refinery, the largest in the San Francisco Bay Area and one of the biggest in California, would likely push prices for fuel in the state past $4/gal, analysts say.

The premium traders paid for spot Los Angeles Carbob gasoline delivered in August versus New York Mercantile Exchange RBOB gasoline jumped by about 25 cents/gal the day after the fire on concerns about near-term deliveries from the Richmond facility.

On Wednesday, the premium reached as high as 35 cents, bringing the price per gallon to about $3.33.

The fire, which started at about 6:30 p.m. local time Monday, caused the crude unit to spew toxic gas into the air, prompting police to order residents in Richmond and several other communities to stay indoors for a few hours.

Nearly 200 people visited a local medical center after the fire, complaining of respiratory problems and eye irritation.

The first indication of a problem with the crude unit was seen around 4:30 p.m., when a small leak of a flammable, diesel-like substance from a pipe caught the eye of workers, said Mark Ayers, the refinery's chief of emergency services, at a press conference late Tuesday.

With a company fire truck nearby, engineers began removing insulation from the leaking pipe.

By 6:30 p.m. Monday, workers saw that the leak was worsening, backed away and began evacuating the refinery. That's when the blast occurred, Mr. Ayers said. No major injuries were reported.

Kim Nibarger, national health and safety inspector for the United Steelworkers union, said that Chevron should have shut the unit down as soon as the company knew there was a leak.

But Chevron's Mr. Comey said the initial leak was not big enough to warrant shutting the unit down or notifying regulators.

"When you have a very small leak like that, there's no community impact," Mr. Comey said. "The situation fundamentally changed several hours after it was initially noticed."


Dow Jones Newswires



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