Shell asked to keep oil refinery open

The Associated Press

Shell Oil should keep its Bakersfield oil refinery open at least until next year so California farmers are ensured a supply of diesel fuel during their harvest, California Attorney General Bill Lockyer told the company in a letter April 23.

In his missive, addressed to Shell President Lynn L. Elsenhans, Lockyer stressed that plans by the Houston-based company to close down the 70,000-barrel-a-day refinery by Oct. 1 could hurt area consumers, farmers and the state’s economy.

The company has said it is closing the facility because crude oil supplies in the San Joaquin Valley are drying up and the refinery has not been profitable in two of the last three years.

“Shell should postpone the planned shutdown ... in order to assure an adequate supply of diesel fuel for the harvest months that are vital to the health of the valley’s economy,” Lockyer wrote. “Pledges to supply diesel from other sources after October 1, 2004, are too limited and fraught with risks.”

Lockyer also suggested that Shell “aggressively” seek a buyer for the refinery, one of three owned by Shell and 13 statewide.

“California can ill-afford a reduction in refining capacity of this magnitude,” Lockyer wrote. “Shell should leave no stone unturned in trying to find a buyer for the refinery.”

If the refinery were to close, Lockyer added, Shell should ensure supplies from its Martinez refinery reach the Bakersfield area.

Shell spokesman Cameron Smyth said April 23 the company had not yet received Lockyer’s letter, adding that the company still planned to close the refinery as scheduled.

“We have made it clear that Shell would take any credible offers made for the refinery and while inquiries have been made, to date, no offers have been received,” Smyth said. The company would make good on its contracts to provide diesel fuel through the harvest season and beyond, Smyth added.

Lockyer’s office has been investigating the refinery situation for two months.

California’s U.S. senators have also spoken out against Shell’s plan to close the Bakersfield refinery on grounds that a shutdown could lead already high gas prices in the state higher. The refinery provides 2 percent of the state’s gasoline.