July 5, 2011 / 5:21 PM / 6 years ago

UPDATE 2-Exxon refinery cuts rates after Montana oil spill

 * Exxon working to replace oil supply to Billings refinery
 * CHS Montana refinery partly supplied by Exxon pipe
 * Montana refineries supply niche market
 (Adds comment, detail from CHS)
 HOUSTON, July 5 (Reuters) - ExxonMobil Corp's (XOM.N) 60,000 barrel-per-day (bpd) Billings, Montana refinery cut back production over the weekend after the company's Silvertip pipeline spilled 1,000 barrels of crude into the Yellowstone River north of Billings.
 The 40,000-bpd pipeline also partly supplies CHS Inc's (CHSCP.O) 58,000-bpd refinery in Laurel, Montana, about 16 miles southwest of Billings. That plant was "operating normally" on Tuesday as it receives most crude through its own Front Range pipeline that stretches north into Canada, spokeswoman Lani Jordan said.
 The Montana refineries are considered niche plants that utilize local crude oil to supply a small market that is physically isolated from major refining regions like those on the West and Gulf coasts.
 A spokesman for ConocoPhillips' (COP.N) 58,000-bpd Billings refinery said reports over the weekend that the refinery is supplied by the Silvertip line were erroneous.
 "ConocoPhillips' operations in the Billings area have not been impacted by the pipeline spill," said company spokesman Rich Johnson. "We have provided some spill response equipment and supplies and are on stand by to provide additional mutual aid support if needed."
 The Silvertip pipe brings crude from oil fields in southern Montana north to the Exxon and CHS refineries.
 ExxonMobil was working to arrange a replacement supply of crude for the refinery, said spokesman Alan Jeffers.
 Jordan said CHS also was evaluating rail and trucking options for bringing in crude normally received from the Silvertip line.
 "Silvertip is not a big piece of our picture," she said. "We do from time to time pull some barrels off the Silvertip." (Reporting by Erwin Seba and Kristen Hays; Editing by Lisa Shumaker and Sofina Mirza-Reid)       

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