California inspectors have not closely assessed the damage sustained by a crude distillation unit in Chevron Corp.'s (CVX) Richmond refinery, but they suspect the oil giant may have to make time-consuming replacements of some of the unit's parts, a local inspection official said Tuesday.
"A good part of that section will be have to be replaced," said Randy Sawyer, Chief Environmental Health and Hazardous Materials Officer for Contra Costa County. "They won't have to replace the whole unit, but sections will have to be repaired and fixed for sure."
Replacing or extensive repairs to the crude unit could keep the refinery at minimal operations for months. BP PLC (BP) kept its Cherry Point refinery in Blaine, Wash., down for three months after a fire in February broke out at that facility's crude unit. Motiva Enterprises PLC, a joint venture between Royal Dutch Shell PLC (RDSA) and Saudi Arabia Oil Co., said it would take at least six months to restart its refinery in Port Arthur, Texas, after a June accident at the crude unit there.
A lengthy outage could have major impact on gasoline prices in California. The 245,000 barrel-a-day Richmond refinery is the third largest in the state and the largest in the San Francisco Bay area. The Aug. 6 fire broke out hours after a leak was discovered in the crude unit, the first step in the oil refining process and a critical component of refining operations. The blaze lasted for hours, sending thick black smoke over the San Francisco Bay and causing noxious emissions that sent hundreds of people to the hospital complaining of respiratory and eye problems. Some impact is being already felt, with Bay Area spot gasoline prices on Monday commanding a 25 cent premium over September Nymex gasoline.
Chevron has not given any kind of time frame as to when the crude unit can be restarted.
Mr. Sawyer said that Chevron employees and state and federal regulators cleared the area around the damaged site Monday to assess any structural damage and ensure that all potentially dangerous crude and chemicals are out of the system.
The U.S. Chemical Safety Board, an independent federal agency that inspects industrial chemical accidents, would seek to assess whether a particular pipe connected to the crude unit may have been corroded, said Daniel Horowitz, the board's managing director. According to Mr. Horowitz, a Chevron inspection in November turned up evidence of corrosion in another, nearby pipe, which was replaced at the time.
"We'd like to see that pipe removed and have tests done on it," Mr. Horowitz said.
Chevron declined to discuss the possible causes of the fire, saying inspectors have not been able to get close enough to the damaged equipment yet.
"It is still premature to speculate on the cause of last week's incident," Chevron spokesman Justin Higgs said. "We will have a better understanding (of the damage) when we're able to get closer to the unit to inspect."
A fire also broke out Monday afternoon at Shell's refinery in Martinez, Ca. Shell declined to say at which unit the fire took place, only saying that its fire crews extinguished it and that the company notified the Contra Costa County Health Services.
"The unit was evacuated immediately and all personnel were accounted for," Shell spokeswoman Kayla Macke said. Shell declined to say whether the fire had impacted production. A California trader said the incident had little impact on the market.
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