UPDATE 2-Fire shuts unit at Valero Quebec refinery

Tue Feb 2, 2010 3:25pm EST

Related Topics

* Fire damages 66,000 bpd gasoline processing unit

* No word yet on restart

* Canada's second-largest refinery

* Not expected to cause fuel shortages in Quebec (Adds company comments, gasoline price reaction)

CALGARY, Alberta, Feb 2 (Reuters) - Valero Energy Corp's (VLO.N) 265,000 barrel a day refinery near Quebec City was damaged by fire early on Tuesday, shutting a key gasoline processing unit for an indefinite period, the company said.

However, the outage at the Jean Gaulin refinery, Canada's second largest, is not expected to cause fuel shortages in Quebec as the company has plenty of inventory, said Ultramar Ltd, the Valero subsidiary that runs the plant.

The 66,000 bpd fluid catalytic cracker unit ignited around 2 a.m. local time and burned for more than 2-1/2 hours. After it was extinguished, a smaller blaze ignited from some pumps, Ultramar spokesman Louis Forget said.

The cause is under investigation, but efforts are being complicated by the water that froze after being pumped into the blaze, with overnight temperatures falling to -26 Celsius (-15 Fahrenheit, he said.

"By the time we find out, it could take some days," Forget said.

The French-language TVA television network said 40 firefighters battled the blaze.

No injuries were reported. Residents in the area were advised of the fire, but were not evacuated, TVA reported.

Apart from the damaged unit, the refinery is still operational, Forget said.

Traders of New York Harbor gasoline said a small gain in prices on Tuesday may have been partly the result of the Quebec refinery fire. Though not a direct key supplier to the harbor, it is a supplier to the Boston area in the U.S. Northeast.

The refinery processes imported crude oil that it receives by tanker on the St. Lawrence River.

Quebec is expected avoid gasoline shortages, Forget said. Ultramar has inventories at the refinery, its terminal in Montreal and elsewhere. In addition, the other two refineries in Quebec are operating under capacity, he said.

"So if at one point in time we need it, which we don't feel we will, we could borrow product from them, or we could import," he said. "But at the present time we don't feel we will need it, so there's no concern for supply."

Royal Dutch Shell (RDSa.L) plans to close its Montreal East refinery this year and turn it into a terminal, but the work is not expected to start until at least spring. (Reporting by Jeffrey Jones, Rebekah Kebede and Joshua Schneyer; editing by Rob Wilson)

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