Shell shutdown of crude line to California refinery leads to accusations

BAKERSFIELD, Calif. - Soon after its parent company filed for bankruptcy protection Dec. 22, Big West closed its refinery in Bakersfield for what was to be 10 days of routine maintenance, but it has yet to come back on line. Some say Shell Oil is trying to use its leverage to put the plant it sold to Big West in 2005 out of business. Concern about the facility's fate has been growing since Big West's parent, Flying J Inc. of Ogden, Utah, filed for Ch. 11 bankruptcy protection on Dec. 22. The company shut down the Bakersfield refinery soon afterward for what it said would be 10 days of routine maintenance. On Jan. 8, Kevin Cable, committee chairman for the United Steelworkers, singled out Shell as one of the main obstacles to the reopening of the plant. In a memo to refinery workers, he said Shell was demanding onerous payment terms from Big West to resume crude deliveries and that it had closed pipelines to the facility, preventing shipments from other suppliers.
Tim Kollatschny, a supply manager for Shell, confirmed that Shell had closed a single pipeline to the Bakersfield refinery and suspended crude deliveries while it negotiated with Big West. But he denied that Shell was seeking unreasonable terms or that it had the power to shut down the facility. Kollatschny said Big West had other means to get the crude it needed and that Shell supplied "less than 20 percent" of the 50,000 to 60,000 barrels of crude processed there daily. 1/12/09 To read the full story, subscribe now to Energy Pipeline News.