Chevron’s damaged Crude Unit 4 to remain shut through the winter as gas prices soar

The stoppage of operations at Chevron’s damaged Crude Distillation Unit, which supplied units at the Richmond refinery responsible for 38 percent of the Bay Area’s total refining capacity, has been partially blamed for soaring gas prices across the state.

California’s Air Resources Board, which granted refineries a waiver to start refining crude with higher emission this week in an effort to reduce the impact of declining refinery output on fuel prices, attributed rising gas prices to the fire at the Chevron plant, and pipe contamination and electricity interruptions at other refineries.

“Due to the convergence of a number of recent events and planned shutdowns of several refineries and pipelines, the gasoline market in California is currently experiencing tight supplies,” CARB Transportation Fuels Branch chief Mike Waugh said in a statement. “This has led to a sharp increase over the last few weeks in retail and wholesale prices.”

Waugh said the impact on air quality of the refining of lower grade winter blend would be “negligible” and necessary “for the preservation of the public peace, health and safety.”

Chevron spokesperson Derek Jansen confirmed the Crude Distillation Unit, which has been closed since Aug. 6, would remain closed for the rest of the year and said no Chevron employees would lose their jobs as a result of the prolonged closure of the unit. Chevron is waiting for the outcome of ongoing investigations into the cause of the fire and the city’s approval of repairs to the unit.

“We expect the Crude Unit to remain offline through the fourth quarter of 2012,” Jansen said. “While the crude unit is down at Richmond, the refinery continues to produce gasoline through other parts of the refinery and we continue to be adequately supplied to meet our customers’ demands.”

At its peak in 2011, the Richmond refinery processed   257,000 barrels of crude daily, Jansen said. Jansen would not say how much the plant’s refinery capacity has been affected by the closure of the crude distillation unit, but said gas prices would continue to respond to market forces and that Chevron welcomed the Air Resource Board’s decision.

Chevron’s application for repairs and renovations to the plant came at a time when the city of Richmond was beginning to take a tough stance on safety standards at the plant.

“We are now working with the city of Richmond to gain approval for permits to allow us to move forward with repairs,” Jansen said. “We appreciate the commitment of the intent of the city to expeditiously process permits necessary to begin repairs at the refinery.”

Jansen said Chevron had committed to hiring union labor in the reconstruction of the plant, and would encourage its contractors to spend on Richmond businesses.