UPDATE 5-Texas refiners restart after overnight power outage

* Overnight power outages hit 4 pct of refining capacity

* BP Texas City, third largest U.S. refinery, still shut

* Boosts Gulf Coast gasoline; futures hit 33-mth high

* No injuries reported, shelter-in-place order lifted

(Updates with impact to gasoline futures, adds BP, Valero comment, trader comment)

By Erwin Seba

HOUSTON, April 26 (Reuters) - Some oil refiners said they began to restore operations in Texas City on Tuesday as transmission lines returned to service after overnight power outages shut down 4 percent of the nation's refining capacity and boosted gasoline prices.

Officials also told residents of Texas City, 50 miles (80 km) southeast of Houston, they could go outdoors again after they determined the unplanned shutdown of three refineries and a Dow Chemical Co (DOW.N) chemical plant did not release unhealthy amounts of harmful gases.

Valero Energy Corp (VLO.N) said its 214,0000 barrel-per-day (bpd) Texas City refinery was restarting after the outages boosted wholesale summer-grade Gulf Coast gasoline prices and helped send U.S. gasoline futures to their highest in 33 months. [ID:nN26289681] [ID:nN26269167] [ID:nWEN1841]

Spokesman Bill Day said the restart could take "several hours to a couple of days."

Marathon Oil Corp (MRO.N) also said it was working to bring units back online at its 76,000 bpd refinery that also shut because of the outage. [ID:nWEN1809]

BP Plc's (BP.L) (BP.N) 475,000 bpd Texas City refinery, the nation's third largest, remained shut, spokesman Scott Dean said. He said power had been restored at the chemical plant on the refinery grounds, but power at the refinery itself was intermittent and therefore unreliable. BP had no estimate of when units would restart.

"This is like the aftermath of a major weather event," Dean said.

BP said teams were assessing status of process units and inspecting the plant's on-site power facilities.

A Gulf Coast trader said that power outages aren't uncommon and refinery units are designed to withstand sudden stops and quickly resume operations. But sometimes sudden shutdowns can damage units, "and the return to production in those cases is more than just 'flipping the switch,'" the trader said.

No injuries were reported at the plants hit although a brief fire broke out on a crude distillation unit at the BP refinery following the outage. Refinery firefighters quickly extinguished the blaze.

Texas City residents first noticed problems Monday night at or near the BP refinery, which faces continued scrutiny from the U.S. and state regulators for alleged safety problems and pollution after an explosion in 2005 killed 15 workers and injured 180 others.

"There was like a lightning flash back where the plants are," said Jennifer Reynolds, who lives about 2 miles from the BP refinery. "The sky lit up from the flares. My lungs are burning. It smells awful."

Flares are used to burn off hydrocarbons that can't be processed normally in a refinery's production units.

Officials had ordered Texas City residents to stay indoors with their air conditioning off late Monday and again Tuesday morning while schools canceled classes on Tuesday.

Meanwhile, the Cameron Highway Pipeline was diverting crude shipments from Texas City to refineries in Port Arthur, Texas, a source told Reuters. [ID:nN26274745]

FAULT ON CUSTOMER SIDE OF LINES

Local power provider Texas New Mexico Power, a unit of PNM Resources (PNM.N) said the series of electrical outages were likely caused by a buildup of refinery byproducts on transmission equipment, exacerbated by a lack of rain in the area that normally removes the residue. The first problems emerged about 90 minutes before the BP refinery lost power.

The utility transmission lines were back in service by mid-day Tuesday and crews were working to clean the equipment, said TNMP spokeswoman Cathy Garber.

She said problems began between 9:30 p.m. and 11:30 p.m. local time on Monday (0230 and 0430 GMT Tuesday), when four faults occurred on a customer's side of the lines, meaning a failure of customer-owned equipment connected to privately owned generation that serves the industrial site.

Those problems, however, also affected TNMP equipment. Utility policy prevented her from identifying the customer.

Several hours later, around 4:30 a.m., three TNMP lines also tripped, causing a power loss to one of the other refiners and a petroleum pumping station.

An hour later, another line tripped due to faults on a customer site, she said. (Additional reporting by Eileen O'Grady, Kristen Hays and Bruce Nichols in Houston; Editing by Marguerita Choy)