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* BP aims to sell two of its five US refineries this year
* Company focusing on Northern Tier plants
* Probation for its U.S. refineries ends this month
By Kristen Hays and Erwin Seba
HOUSTON, March 6 (Reuters) - BP Plc is actively marketing its California refinery, but not its larger Texas City, Texas plant, the site of a deadly explosion in 2005 that later underwent a $1 billion overhaul.
Iain Conn, BP's head of refining and marketing, told reporters at the annual IHS CERA energy conference in Houston on Tuesday that "we are in the market" with the company's 253,000 barrel-per-day (bpd) Carson, California, refinery and retail sites.
But the company has not yet begun marketing its 406,570-bpd Texas City, Texas, plant, he said. BP will take that step after it clears regulatory hurdles primarily set by federal safety regulator OSHA for completion by the end of the first quarter.
Both plants are drawing interest from would-be buyers, he said.
BP announced in February 2011 that it would sell the refineries by the end of 2012 as the company reorients its U.S. refining operations to take advantage of Canadian crude supplies.
"We are moving to a Northern Tier refining strategy," he said, focusing on three refineries near the Canadian border that can process that heavy crude oil, which is cheaper than West Texas Intermediate and much cheaper than other global crudes.
The star of that effort is BP's 405,000 bpd Whiting, Indiana, refinery, which is undergoing a $4 billion upgrade to increase its ability to process heavy crude.
Currently, BP's Indiana, Ohio, and Washington state refineries run a combined 200,000 bpd in Canadian crude with the Whiting plant absorbing 70,000-80,000 bpd, Conn said.
After the reconfiguration is completed next year, the Whiting refinery alone will be able to run 350,000 bpd of crude oil from Canada -- without increasing its overall capacity, he said.
"We will be making the same product from a cheaper feedstock," Conn said. "I'm betting inland refineries will do well."
And that ability to capture benefits of cheap crudes is key to refining success, he said. Refineries able to process Canadian crude will be winners, while less complex plants that depend on more expensive Brent-priced global crudes will struggle. Several such refineries on the East Coast have already shut or will shut if buyers do not step up.
Conn also said the company would consider buying another refinery, but only in Asia, especially in China, where demand for refined products is growing.
BP's North American products division, which oversees its U.S. refineries, will wrap up a three-year probation term this month stemming from the 2005 explosion that killed 15 people and injured many more.
In March 2009 a federal judge accepted the division's guilty plea to a felony Clean Air Act violation. The company paid a $50 million fine and began the probation term, which required compliance with earlier settlement agreements with the U.S. Occupational and Safety Health Administration and the Texas Commission on Environmental Quality, the state's air pollution regulator.
Conn said nearly seven years after the blast, Texas City's workers have "turned that refinery from a liability to an asset."
But it does not fit BP's plan to focus on Northern Tier refineries.
While other Gulf Coast refineries have increased refined product exports to Latin America and South America as demand in the United States decreased, the Texas City plant just sends products to the U.S. Northeast through the Colonial Pipeline, Conn said.
"We haven't been exporting internationally," he said.