UPDATE 3-NJ Bayway refinery may be shut for weeks; Hess still idle

Fri Nov 2, 2012 4:13pm EDT

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By Janet McGurty

NEW YORK Nov 2 (Reuters) - Phillips 66's Bayway refinery in New Jersey, the second largest in the region, could be shut for weeks due to heavy damage caused by salt water flooding, a source familiar with operations said on Friday.

The source said Phillips 66 is telling employees it is "optimistic" the 238,000 barrel-per-day refinery will restart soon, but has not given any internal estimates. In an update on its website on Friday, the company said it would make a decision on when to reopen "once all assessments are complete."

Based on an initial damage assessment, the source estimated that the closure could last weeks.

Separately, Hess Corp gave no indication of when its neighboring 70,000 bpd refinery and terminal in Port Reading might resume service following widespread power outages.

"The oil terminals and refineries used to supply them are still not in operation, for similar reasons," said John Hess during the company's third quarter earnings call.

Hess said that while there was no power the refinery or truck terminal, they were using generators to load gasoline and diesel onto trucks and barges.

The lack of good news from operators stoked fears that the plants could be down for an extended period of time, straining an already tight Northeast fuel market.

A Phillips 66 company spokesman was not immediately available for comment.

"The refinery remains temporarily shut down at this time while we continue to clean up, assess equipment and begin to make necessary repairs," Phillips 66 said on its website.

The source familiar with Bayway's operations said work is under way on one of the two docks where the pumps were ruined by salt water which surged from the Arthur Kill separating New Jersey from Staten Island. Estimates for one dock to return to service and receive product are for next week.

Parts of the neighboring co-generation plant which provides steam and power to the refinery were under four feet of water during the storm, but it is expected to be able to restart quickly, the source said.

Phillips 66 said it expected to reopen its Linden fuel supply terminal to emergency response agencies on Friday afternoon and that it was working on "alternative arrangements" to continue supplying the facility until the refinery returns to normal.

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