Shell Oil Will Not Soften Production at Bakersfield, Calif., Refinery

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The Bakersfield Californian

Shell Oil said Monday it will not relax production at its Bakersfield refinery this summer. The announcement comes on the heels of a front-page Los Angeles Times article on Monday that says the newspaper obtained internal company documents showing Shell planned to reduce the amount of crude it processes by about 6 percent in July and another 6 percent in August.

The article also states Shell intended to curtail production at its Martinez refinery by 10 percent in July so routine maintenance work could be done.

Shell said in a prepared statement it “plans to operate both the Bakersfield and Martinez refineries at normal summer-time operations through the full summer driving season that closes around Labor Day.”

The company said it did not know what documents the Times was referring to but “they seem to represent preliminary and early planning scenarios that have since been reviewed and revised.”

Shell spokesman Stan Mays said the company changed its summer plans for the refineries prior to Monday’s article in the Los Angeles Times.

Jamie Court, president of the Santa Monica-based Foundation for Taxpayer and Consumer Rights, said the statement was “vague” and that he was still concerned Shell would slow refinery production this summer.

The foundation also announced Monday that company documents dated May 24 “show Shell Oil is slowing down production at its Bakersfield and Martinez refineries for ‘routine maintenance’ leading up to the busiest driving holiday of the year.”

The documents posted on the group’s Web site include a “Bay Valley Complex June through August Production Forecast.” The Bay Valley Complex includes Shell‘s Bakersfield and Martinez refineries.

The documents back up the Times’ report. Court would not say if he had provided the Times with information.

The Bakersfield refinery makes 2 percent of California’s gasoline and 6 percent of the diesel. Industry experts have said the refinery’s closure, scheduled for Oct. 1, will lead to higher fuel prices. Shell has said it will work to soften the closure’s impacts on motorists and local farmers.

With gas and diesel already going for more than $2 a gallon, the state can ill afford any blip in supply this summer, according to Rob Schlichting, a spokesman for the California Energy Commission.

“We’re pretty close to the bone here when you look at supply and demand,” Schlichting said. Schlichting also said it was not unusual for refineries to slow production down for routine maintenance work, even during the summer driving season.

Shell announced in November that it was closing and dismantling the refinery because continual declines in San Joaquin Valley heavy crude oil make it uneconomical to continue operating the facility for the long-term.

Shell‘s critics have charged the company with closing the refinery to increase profits at the pump, an allegation the company has denied.

In April, the Foundation for Taxpayer and Consumer Rights said it had obtained Shell documents that showed the refinery turned a profit in 2003.

On Monday, the taxpayer group said additional documents show the refinery’s profits total $24.7 million this year to date. Court’s group said it was forwarding the information to the Federal Trade Commission and California Attorney General Bill Lockyer.

“We hope these documents give you the basis to take action against Shell in the next month,” the group wrote. “They show that, absent a regulatory response, Californians are likely to pay $3 per gallon at the pump by Labor Day.”

Tom Dresslar, a spokesman for the attorney general, said his office has an ongoing investigation into the refinery closure and that a consultant his office hired to assess the condition of the refinery continues to do his work. If the consultant determines the refinery is commercially and economically viable, he will look for buyers.

“The attorney general continues to be concerned that Shell not take any actions that would undermine our consultant’s work,” Dresslar said, adding that Shell has expressed a willingness to cooperate.

Shell has said in recent months that it will entertain any credible offers to purchase the refinery.

A spokesman for the FTC said he could not comment on whether his agency was investigating the refinery’s planned closure, nor on the documents from the consumer rights group.

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