By Kristen Hays
HOUSTON Nov 7 Alon USA Energy Inc plans
to shut down its California refineries for a year due to high
costs of imported oil, further cutting the state's already
depleted capacity to make fuel.
Chief Executive Paul Eisman said on Wednesday Alon intends
to restart the 94,000 barrel per day system, which comprises
three plants in Bakersfield, Paramount and Long Beach, in the
fourth quarter of 2013 at the earliest.
Timing of the restart will depend on the completion of a
facility to bring in rail-delivered crude produced in the U.S.
Midcontinent, which would be cheaper than importing crude. The
plant will also be reconfigured to run the crude, which will
yield less asphalt and boost profits.
Low asphalt demand have weighed on margins, Eisman said.
"Midcontinent crude oils are lighter than our West Coast
alternatives and will produce less asphalt," Eisman said. "This
improves our refining economics and allows us to run more crude
in any given asphalt demand scenario," he told analysts during
the company's third-quarter earnings conference call.
California gasoline prices surged last month as refinery
problems - including an August fire at Chevron's Richmond
refinery - reduced fuel supplies to the state, which is largely
disconnected from other U.S. regions due to a lack of pipelines.
Eisman said that in the longer term, Alon has its eye on
replacing rail-delivered oil with increased production from
California's Monterey shale play.
Roger Read, an analyst with Wells Fargo Securities, said in
a note to investors that idling the California refineries should
make Alon's operations more stable, though he noted that shut
facilities bring in no cash.
Alon's Long Beach facility and the Paramount facility, which
produces asphalt, shut down last month and the Bakersfield plant
is currently shutting down, Eisman said.