RPT-UPDATE 8-Four dead in Tesoro Anacortes refinery fire

(Repeats to more subscribers)

* Four die in Washington refinery fire

* Fire started in naphtha unit during planned work

* Three workers in critical condition in hospital

* Tesoro CFO says crude distillation still running (Updates with Tesoro’s comment on production rates)

SEATTLE, April 2 (Reuters) - Four Tesoro Corp TSO.N employees were killed and three critically injured in an early morning blaze at the oil company's 120,000 barrel-per-day refinery in Anacortes, Washington on Friday, cutting production at the plant to about three-quarters of capacity.

The fire started in the highly flammable naphtha unit, which was undergoing maintenance, at 12:30 a.m. PST (0730 GMT) and was contained by 2 a.m. The company said no offsite damage was caused.

The blaze shut the plant’s hydroprocessing units, the company’s chief financial officer said, adding that other units could be shut after a damage assessment [ID:nN02150510]. Tesoro has not yet gained access to the fire’s site to investigate.

The refinery’s crude distillation unit is still running, but the plant is only at 70 percent to 75 percent of capacity, a spokesman said [ID:nN02174343].

Tesoro expects to make up any lost production by purchasing from West Coast inventories or boosting production at its two California refineries, the CFO said.

The U.S. Energy Information Administration said this week there were 32.5 million barrels of gasoline in inventory on the West Coast, well above what is needed to supply the region.

Four workers -- two women and two men -- were airlifted to Seattle’s Harborview Medical Center, about 70 miles (113 km) south of the refinery with severe burns. One of the women later died, and the other three are still in critical condition, a hospital spokeswoman said.

The U.S. Chemical Safety Board said it was sending a team of investigators to probe the fire.

“It’s a major case,” CSB spokesman Daniel Horowitz said. [ID:nN02156510].

The Tesoro Anacortes refinery fire is the deadliest accident involving production at a U.S. refinery since the BP BP.L Texas City explosion on March 23, 2005, in which 15 workers were killed and 180 others injured.

Four contract workers at the LyondellBasell [ACCEIN.UL] refinery in Houston were killed when a crane collapsed in July 2008, and two workers were killed in fire on a tank under construction in March of this year at Holly Corp's HOC.N Artesia, New Mexico, refinery.

The CSB is already investigating an October fire at Tesoro’s Salt Lake City refinery.

The Anacortes fire could mean expensive legal trouble for Tesoro.

“I can confidently predict there are lawyers already on site or in contact with unions representing Tesoro employees and signing up claimants as we speak,” said Lester Brickman, a professor at the Benjamin N. Cardozo School of Law in New York. “The ultimate liability depends on the number of people who had sufficient proximity to the fire to have viable claims.

“Realistically, at this point, there is little Tesoro can do to minimize liability,” Brickman said. “Naphtha is a very volatile substance, and if Tesoro were found to have been significantly negligent, that could magnify its liability.”

The fire started in a part of the plant processing naphtha, a liquid that boosts gasoline octane to make premium grades of gasoline required by some higher-performance cars. (Reporting by Janet McGurty and Bill Rigby; Additional reporting by Sweta Singh in Bangalore, Erwin Seba in Houston and Jonathan Stempel in New York; Editing by Andrew Hay and Jan Paschal)