Phoenix Circle Ks Run Short of Fuel
Shell Bakersfield Refinery to Stay Open
BP Offers Low Sulfur Fuel in Northwest
ChevronTexaco Fined For 1955 Leak
Clean Energy Gets Phoenix LNG Contract

PHOENIX CIRCLE KS RUN SHORT OF FUEL

PHOENIX, AZ. — A distribution problem caused gasoline shortages at Circle K branded locations in Phoenix in mid-August.

According to Circle K officials, "unforeseen logistical problems" caused some stations to have "shortages of certain grades of gasoline."

Circle K contacted AAA Arizona to get the word out to the public that the shortage was a temporary glitch in their distribution system and not a widespread fuel shortage

SHELL BAKERSFIELD REFINERY TO STAY OPEN

BAKERSFIELD, CA. — Marketers across California and the West have been given a reprieve on a looming supply problem as Shell has decided to keep their Bakersfield refinery operating through March 31, 2005.

Shell had announced at the beginning of the year that it would close the 65,000 barrel per day refinery in October claiming the site was no longer financially viable because the San Joaquin Valley crude fields that supplied the refinery were tapped out. Shell had already begun cutting back supply from the Bakersfield refinery and had planned to begin shutting down units in mid-September.

Since the time of the closure announcement marketers had been protesting the action, claiming that it would create major supply problems throughout the state.

With the closure of the refinery "it's entirely likely there will be fuel shortages," predicted Jay McKeeman, executive director of the California Independent Oil Marketers Association, "diesel shortages in Bakersfield at the height of the harvest season."

State regulators had begun looking at the issue of removing supply from the already tight California market. California Attorney General Bill Lockyer had commissioned a report by the Dallas, TX.-based consulting firm of Turner, Mason & Company to report on the Bakersfield refinery's financial viability as part of a formal investigation into Shell's actions. While that report has not been released, it is believed that it questions Shell's decision to close the facility.

In addition, the Federal Trade Commission announced in mid-July that they will open a formal anti-trust investigation into Shell's decision to close the refinery.

"We're looking at any possible anti-trust violations associated with the closure," said FTC General Counsel William Kovacic. "We regard this matter as a very important one and we know time is of the essence."

With Shell's decision, time is no longer as critical. The major oil had said they would be willing to sell the refinery to a qualified buyer but potential buyers were still examining the property.

Reportedly over 30 companies initially expressed interest in buying the Bakersfield refinery.

Shell officials said they hoped their action would create goodwill among the marketer community as well as consumers.

"The drivers of this state need the gas produced by this refinery," said Lockyer in an official statement. "I remain committed to doing everything I can to keep it open."

BP OFFERS LOW SULFUR FUEL IN NORTHWEST

BLAINE, WA. — In a step toward increasing supply in the Pacific Northwest, BP has started up a new $115 million Clean Gasoline Unit at its Cherry Point Refinery.

The new unit will produce gasoline "that exceeds all current and impending gasoline quality regulations." The fuels have significantly lower sulfur and NOx levels and will be marketed primarily in the Northwest.

"Gasoline produced at Cherry Point will be the cleanest fuel available on the market today," said Rick Porter, BP Cherry Point Refinery Manager.

BP Cherry Point Refinery produces 3.5 million gallons of gasoline per day and is the third largest refinery on the West Coast.

CHEVRONTEXACO FINED FOR 1955 LEAK

SUNBURST, MT. — ChevronTexaco has been ordered to pay $40.3 million for environmental damage from a gasoline pipeline leak that occurred here in 1955.

ChevronTexaco is legally responsible for activities that took place at the Sunburst Works Refinery that was formerly operational in the area.

The Great Falls, Montana jury found that ChevronTexaco had failed to "adequately" clean up the oil spill that had occurred almost 50 years ago. They awarded $15.3 million in compensatory damages and $25 in punitive damages to residents of Sunburst who had filed the lawsuit in 2001.

ChevronTexaco argued that it had cleaned up the site for two years following the discovery of the leak and is still monitoring for pollution at the site. ChevronTexaco also said that its monitoring found that there was "no health risk" from contamination at the location.

In addition, Montana regulators testified that they agreed with ChevronTexaco's analysis and there was no health risk at the former leak site.

ChevronTexaco says it will appeal the decision.

CLEAN ENERGY GETS PHOENIX LNG CONTRACT

PHOENIX, AZ. — Clean Energy has been awarded the LNG supply contract for Valley Metro, the company which provide the public transit service in greater Phoenix.

The five-year contract is worth $34 million in revenue to Clean Energy and includes five additional one-year options.

Valley Metro operates approximately 540 LNG-fueled buses for the City of Phoenix, the City of Tempe, and the Regional Public Transportation Authority in the Phoenix metropolitan area. It is expected this fleet will use between 8 million and 11 million gallons of LNG annually.

"We are pleased to begin supplying LNG to Valley Metro, one of the leaders nationwide in providing clean transit for its customers," said Jim Harger, Clean Energy senior vice president of marketing and sales, announcing the deal. "This agreement reflects Clean Energy's fast-growing position in the LNG supply market for transit and other uses."

Clean Energy is a private company whose major shareholders include Boone Pickens and partners with Ford Motor Company to help expand its market share of natural gas vehicles.

Originally published in the September 2004 issue of O&A Marketing News.
Copyright 2004 by KAL Publications Inc.