Blast at Exxon refinery in California could hike gasoline prices

By Reuters

Feb 18, 2015 09:56 PM EST

An explosion and fire ripped through a gasoline processing unit at an Exxon Mobil Corp refinery near Los Angeles on Wednesday, leaving California with the threat of higher gasoline prices.

Investigators were trying to determine the cause of the blast in Torrance, California, which occurred shortly before 9 a.m. PST (12 p.m. ET). Four contract workers were injured and sent to Long Beach Medical Center for evaluation. Exxon said late on Wednesday that three of the workers had been released.

The company said it was operating units that had not been affected by the explosion at its 155,000 barrel-per-day refinery.

Torrance Fire Captain Steve Deuel said a small ground fire that followed the explosion had been quickly extinguished. He said firefighters and refinery crews also contained a gasoline leak that had been caused by the blast.

Deuel said there was no evidence of foul play.

The California Department of Industrial Relations opened an investigation into the blast, agency spokeswoman Julia Bernstein said.

The workplace safety agency issued an order forbidding Exxon Mobil from operating the 100,000-barrel-per-day fluid catalytic cracker, a central gasoline-producing unit, until the investigation has been completed, Bernstein said.

The department said the shutdown of the unit could last up to six months. It is the second refinery shutdown in recent days.

The price of gasoline in Los Angeles surged to its highest level in about 18 months after the explosion on fears that local supply would tighten in the coming weeks. Shorter supply could mean higher pump prices just as Californians and other U.S. motorists are benefiting from a slump in crude oil prices.

The fluid catalytic cracker is the facility's main gasoline producing unit. Tesoro Corp recently shut its nearby 240,000-barrel-per-day refinery in Martinez after United Steelworkers union members walked out.

The two events sent February deliveries of California gasoline, known as CARBOB, as high as 40 cents above futures.

On the New York Stock Exchange, Tesoro shares rose 5 percent to close at $87.09. The company has three California refineries and may benefit from the incident. Exxon Mobil's shares closed down 2.2 percent at $91.01 on the NYSE.


Torrance Mayor Patrick Furey said in an interview with local television station KNBC that people who live near the refinery should take precautions.

"The most important thing is to shelter in place, stay indoors, no outdoor activity, turn the air conditioners off, keep the windows closed," Furey said.

A structure at the refinery was visibly damaged, and smoke curled around twisted metal. The air near the blast site smelled of sulfur and chemicals.

The South Coast Air Quality Management District dispatched inspectors to take air samples for analysis, said agency spokesman Sam Atwood.

The agency issued a health advisory urging children, the elderly and people with respiratory or heart conditions to stay indoors if they could see or smell smoke and for otherwise healthy people to avoid strenuous activity outdoors if they could see or smell smoke.

Cory Milsap, an electrical contractor at the plant, said many workers were sent home after the explosion. The refinery occupies 750 acres (300 hectares) and has 650 employees and 550 contractors.

"All I heard was a loud sound ... All I saw was smoke and people running, so I made sure I got out of there," Milsap said.

Giselle Monreal, a neighbor who lives across the street from the facility, said the blast shook the ground like an earthquake, knocking a 52 inch (132-cm) flat-screen television off its stand and shattering a window in her garage.

Torrance is a residential suburb about 20 miles (30 km) south of Los Angeles. The North American operations for Toyota Motor Corp and Honda Motor Co Ltd are based there.

The city had a population of more than 147,000 in 2013, according to a U.S. Census Bureau estimate.

Surrounding areas were not evacuated, but nearby schools kept students and staff indoors immediately after the explosion as a precaution, Fire Captain Deuel said.

Exxon was looking into the cause of the explosion, according to Gesuina Paras, a public and government affairs adviser at the company.

Trade publication OPIS, citing an unidentified source, reported that an electrostatic precipitator (ESP), which reduces fluid catalytic cracker particulates, exploded as contract workers were doing maintenance on the nearby fluid catalytic cracking unit, or FCC.

"Contractors working on the FCC to fix the expanders," the source said, adding that an injection of ammonia on top of the flue gas stream caused a pressure buildup, which resulted in the ESP unit explosion.

The unit could take up to a year to replace, the source said.

The United Steelworkers walked out of 11 facilities, including nine refineries accounting for 13 percent of U.S. production capacity, after negotiations on a national contract stalled on Feb. 1. One of the central issues, according to the union, is employee safety.

Torrance has not been involved in the walkouts.

Striking refinery workers said Wednesday's blast underscored concerns the United Steelworkers has about safety standards at refineries and chemical plants nationwide.

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