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Shell to Cut Summer Fuel Output

LOS ANGELES -- Shell Oil Co. plans to put the brakes on production at its Bakersfield, Calif., refinery in July and August, potentially shorting the state's fuel supplies during the summertime driving season, according to internal Shell documents, reported the Los Angeles Times.

The planned cutback is the latest development in the controversy over the refinery, which can process up to 70,000 barrels per day of crude oil and makes about 2 percent of the state's gasoline supply and 6 percent of its diesel. Shell has said it will close the facility Oct. 1 in a move that experts predict will boost pump prices by worsening the chronic imbalance between supply and demand in the state.

The internal documents obtained by the Times, including a refinery output forecast, indicate that Bakersfield will soon be producing far less than its capacity. After relatively high output rates in May and early June, Shell plans to cut crude oil processing about 6 percent in July and another 6 percent in August, according to the forecast.

Those two months are when California's fuel demand reaches annual peak levels.

Aamir Farid, general manager of Shell's refineries in Bakersfield and Martinez, said he couldn't confirm that there was a production slowdown in the works.

"If that's the case, there is a good reason for it," he said. There could be maintenance planned or projections for a shortfall of crude, he added, but "off the top of my head, I don't know what that good reason is. We're not playing any games. We're not shutting down early."
Farid added, "We're going to run as we normally run everything. We're not doing anything different through Labor Day, for sure, because we don't want to impact anything during driving season."

Refining industry experts said production at a facility slated for a shutdown wouldn't need to be curtailed until shortly before the closing date, when the owner would begin emptying and cleaning the equipment.

The Shell forecast says the Martinez refinery, in the Bay Area, will also cut crude processing in July by nearly 10 percent, a reduction attributed to planned heavy maintenance called "turnarounds" as well as other work.
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