RPT-BP Washington refinery remains idle after fire

Tue Feb 21, 2012 8:47am EST

HOUSTON Feb 20 (Reuters) - BP Plc's 225,000 barrel per day (bpd) Cherry Point, Washington, refinery, the third largest on the U.S. West Coast, remained idle for a third full day on Monday after a Friday fire shut the key crude distillation unit.

Potentially, at least, a partial resumption of production could come quickly even if the crude unit, which starts the crude oil refining process, remains shut for lengthy repairs.

The other units at the refinery were placed in warm standby mode, meaning they could restart quickly, if BP officials decide to begin bypassing the crude unit and put feedstocks into those units directly.

Wholesale gasoline prices were expected to spike on Tuesday in West Coast refined products markets by as much as 20 cents a gallon when trading resumes on Tuesday due to the idled plant, analysts have said.

Consumers on the West Coast were also expected to feel the effects of halted production at the refinery, which can produce 3.5 million gallons of gasoline, 2.5 million gallons of jet fuel and 2.2 million gallons of diesel, according to BP.

How soon higher wholesale prices will filter down to consumers was unclear. Gasoline prices were already increasing due to maintenance at refineries in the region and rising crude oil prices.

West Coast consumers pay some of the highest prices in the nation for fuel due to the relative isolation of the region from refining centers on the Gulf Coast and in the Midwest. Pipelines from those areas don't run to the Pacific.

BP spokesman Scott Dean said the company's supply and logistics staff worked throughout the weekend to find alternate fuel supplies and the refinery was feeding fuel to customers from inventory on hand at the refinery.

At the Vancouver, British Columbia, airport, where BP supplies 60 percent of the fuel, the company made a delivery on Sunday, an airport fuel company spokesman said.

The idled refinery was also expected to affect crude oil markets.

When units are not idled for maintenance, the Cherry Point refinery receives between a third and a half of its monthly supply from Canadian producers. It also draws about a quarter of its crude from Russian suppliers with the remainder coming from South American, Middle Eastern and African oil fields.

Only one minor injury was reported due to the fire and all employees were accounted for shortly after the one-hour blaze on a vacuum section of the crude distillation was extinguished.

Federal and state regulators launched investigations of the blaze on Friday. Those probes could take as much as six months before they are finished, the agencies have said.