UPDATE 4-Crews extinguish fire at BP's Cherry Point, Wash, refinery

Fri Feb 17, 2012 11:37pm EST

* Refinery still operating, all workers accounted for

* Wholesale gasoline jumps in LA market after fire

* Refinery's hydrocracker cited 12 times in 2010

SEATTLE/HOUSTON, Feb 17 (Reuters) - A large blaze on Friday afternoon shut the only crude distillation unit at BP Plc's 225,000 barrel per day (bpd) Cherry Point refinery, the largest in Washington state, according to sources familiar with refinery operations.

BP spokesman Scott Dean declined to discuss the status of specific units following the blaze, but did say the refinery in Ferndale, Washington, about 100 miles (160 km) north of Seattle, continued to operate on Friday night.

Initial local media reports said the fire was in a storage unit at the refinery, but local television showed flames rising several stories near a large production unit, causing plumes of heavy black smoke that could be seen for miles.

BP has accounted for all workers, Dean said. One worker was taken to a local hospital for observation following a minor injury.

West Coast refined products traders said a 7.5-cent jump in wholesale gasoline prices in the Los Angeles market on Friday afternoon was due to the shutdown of the crude distillation unit, which does the intial refining of crude oil coming into the refinery and provides feedstock for all other units.

March-delivery California gasoline sold in Los Angeles market at 22 cents a gallon over the price for April NYMEX RBOB gasoline.

Those trade sources also said other units at the refinery could continue to operate while the crude unit is out of production utilizing feedstocks already on hand or, if need be, purchased on the open market.

The fire broke out at about 2:30 p.m. local time (2230 GMT) and was extinguished an hour and a half later, Dean said. The refinery's own fire crews battled the blaze with the aid of surrounding fire departments, including Whatcom County Fire District 7 in Ferndale.

Washington's workplace safety regulator, the Department of Labor & Industries had dispatched two inspectors to the refinery to begin a probe of the fire and its cause.

"One of the things we'll be looking at is did their firefighters respond correctly to the fire," said Hector Castro, department spokesman.

In 2010, Labor & Industries issued 12 citations for serious violations in the safe management of processes involving highly hazardous chemicals at the hydrocracking unit.

Castro said he didn't know if that was the unit involved in Friday's blaze.

BP did not appeal the citations, corrected the problems and paid $69,200 in fines, he said.

BP's Texas City, Texas, refinery was the site of one of the worst refinery disasters in the past decade when 15 workers were killed in a 2005 blast.

A federal investigation found extensive failures in the process safety management at the Texas City refinery. BP also launched an independent probe of safety at its U.S. refineries and found problems at all five. The company spent over $1 billion improving the Texas City refinery.

BP has been praised by the United Steelworkers union, which represents most U.S. refinery workers, for the company's efforts to improve safety at its refineries since the Texas City blast.

In Washington state, the most recent refinery explosion was a deadly blast in April 2010 at Tesoro Corp's Anacortes, Washington, refinery that claimed the lives of seven workers.

West Coast trade saouces said the crude unit may be able to quickly return to production if the damage is not extensive.

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