UPDATE 5-Chicago wholesale gasoline prices rise on BP Whiting refinery fire

Thu Aug 28, 2014 4:15pm EDT

Related Topics

* BP says expects minimal impact from late Wednesday blaze

* One worker taken to area hospital, but later released (Adds Genscape information, paragraphs 8-10)

By Michael Hirtzer

WHITING, Ind., Aug 28 (Reuters) - Wholesale gasoline prices surged in Chicago on Thursday after a fire hit a piece of equipment used to make gasoline at BP Plc's refinery in nearby Whiting, Indiana, trade and industry sources said.

BP said the fire was extinguished at its biggest U.S. plant and it expects little impact on production. The 413,500 barrel per day (bpd) refinery, which BP spent $4 billion expanding to handle more heavy Canadian crude, was still operating.

But gasoline prices rose as traders worried about Whiting, the largest refinery in the U.S. Midwest. They said Chicago CBOB gasoline traded at a 13.00 cent premium to October RBOB futures on the New York Mercantile Exchange, up 5.50 cents per gallon from Wednesday's finish.

Whiting Fire Chief Gus Danielides told Reuters the fire, which was put out by BP's firefighters, appeared to have started in a compressor the size of a large room.

Residents said they heard a loud boom just as the fire started, prompting them to wonder if they should evacuate.

"The doors rattled and the TV shook a little bit," said Jennifer Lopez, whose house sits about a mile from the plant. "You don't know what's going to happen with so many oil tanks nearby."

Trade and industry sources said the fire was confined to a hydrotreater for a gasoline-producing fluidic catalytic cracking unit (FCCU). Hydrotreaters, which use hydrogen to reduce sulfur in motor fuels, normally have compressor equipment.

Energy industry intelligence service Genscape said the fire hit a hydrotreater that removes sulfur from feedstock going to the FCCU. Genscape does not monitor the hydrotreater, but based its analysis on video of the fire from local television stations.

Both FCCUs at the Whiting refinery appeared to be operating normally, Genscape said. It said a blending oil unit appeared to be shut. It went out of production at about 9 p.m. Wednesday local time (0200 GMT Thursday) when fire broke out.

The blending unit also removes sulfur from distillate and gas oil feeds, Genscape said. The FCCU refines gasoil into gasoline.

BP did not specify which unit was affected by the blaze, but said it was on the north end of the refinery.

There are two FCCUs at the refinery and two hydrotreaters. One hydrotreater has a capacity of 105,000 bpd and the other 100,000 bpd. It was unclear if both FCCUs can get by with just one hydrotreater. One of the FCCUs has a capacity of 110,000 bpd and the other can process 65,000 bpd.

One worker was taken to an area hospital for treatment and then released, the company said after the two-hour blaze.

BP said operations "were minimally impacted" and added that "the refinery continues to produce products for customers."

In March, several barrels of oil leaked from the refinery into Lake Michigan.

Small fires and other accidents at refineries are common, said Daniel Horowitz, managing director for the U.S. Chemical Safety Board. He said the board will follow up with BP, but is unlikely to investigate a case that does not involve fatalities or offsite damage.

The Whiting refinery, the seventh-largest refinery in the United States and the largest outside of the Gulf Coast, is the centerpiece of BP's shift to using more of the cheaper, heavy Canadian crude oil from tar sands fields in Alberta.

In November, BP completed a revamp of the refinery to boost intake of Canadian crude from 85,000 bpd to 350,000 bpd.

On July 29, BP's Chief Executive Bob Dudley said Whiting had been refining 270,000 bpd in heavy crude oil in the second quarter of this year and could likely run up to 300,000 bpd.

In 2005, an explosion at a BP refinery in Texas City, Texas, killed 15 people. The company later sold that refinery. (Additional reporting by Erwin Seba, Kristen Hays and Jessica Resnick-Ault; Writing by Terry Wade, Editing by Meredith Mazzilli and David Gregorio)

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