Bloomberg News

U.S. Oil Refiners Preparing for Possible Union Worker Strike

February 14, 2012

(Updates with responses from Exxon, HollyFrontier and LyondellBasell starting in ninth paragraph.)

Jan. 31 (Bloomberg) -- U.S. oil refiners, including ConocoPhillips and Exxon Mobil Corp., have asked contractors to cross picket lines as part of plans to keep plants running if union workers strike, two people familiar with the matter said.

Management at Conoco’s Los Angeles and Ferndale refineries and Exxon’s Torrance, California, refinery requested contractors to help operate their facilities in case the United Steelworkers union, representing more than 30,000 employees nationwide, decide to walk out, said the people, who declined to be identified because the information isn’t public.

The Hague-based Royal Dutch Shell Plc, negotiating on behalf of refiners, made four contract offers that didn’t include a demand for a safety specialist at each facility sought by the Steelworkers, three union representatives familiar with the negotiations said today. The current agreement expires at midnight, U.S. Central time.

“Shell remains optimistic that a mutually satisfactory agreement can be negotiated with the USW,” Emily Oberton , a Houston-based spokeswoman for the company, said. She declined to release any details of the talks.

Conoco has “the responsibility to maintain the continuity of our operations and we have contingency plans in place,” Rich Johnson, a spokesman at the company’s headquarters in Houston, said in an e-mailed statement. “All of our refineries that could be affected by a labor action are prepared to operate using personnel who are fully trained.”

Conoco, Exxon

Conoco asked contractors to cross the picket lines in the case of a stoppage, the two people familiar with the company’s preparations said.

Irving, Texas-based Exxon asked contractors to report to the Torrance plant with overnight bags in case a walkout occurs and the plant is forced to lock in workers, the people said.

Daymond Rice, an Exxon spokesman at the Torrance refinery, declined to comment on the company’s plans during talks.

“The negotiation process has been successful in the past and resulted in agreements that were mutually beneficial for both the company and the union,” he said by phone.

Exxon received a notice from the United Steelworkers of intent to strike at the 60,000-barrel-a-day Billings refinery in Montana if there is no new labor agreement, Rachael Moore, a company spokeswoman in Fairfax, Virginia, said in an e-mail.

Valero Port Arthur

Valero Energy Corp. received notice that union workers at the 310,000-barrel-a-day Port Arthur refinery in Texas “can strike or will strike” if an agreement isn’t reached, Chief Executive Officer Bill Klesse said on a conference call with investors today. The San Antonio-based company plans to operate the refinery if a strike occurs, he said.

“We continue to negotiate,” Klesse said. “I have the expectation that we will have an agreement.”

Valero has negotiated an “orderly shutdown” with union workers at the 195,000-barrel-a-day Memphis refinery in Tennessee in the event of a strike, Klesse said.

London-based BP Plc will cut production at the 420,000- barrel-a-day Whiting refinery in Indiana “to a level that maintains safe winter operations” if a strike occurs, the company said in an e-mailed statement.

“We would not hire replacement workers because using replacement workers at represented plants including Whiting would disrupt the progress BP has made with USW in continuing to improve safety and operational performance,” BP said.

Tesoro, HollyFrontier

San Antonio-based Tesoro Corp. distributed procedures to follow in the event of a disruption, such as how to cross a picket line, said two people, who declined to be identified because the information isn’t public.

“We do not believe there are any issues between Tesoro and the USW that would lead to a strike,” Tina Barbee, a Tesoro spokeswoman in San Antonio, said in an e-mail. “However, we have prepared appropriate site contingency plans if they are deemed necessary.”

HollyFrontier Corp. has lined up contract workers to help run the Cheyenne refinery in Wyoming and Woods Cross plant in Utah in case of a walkout, one person said.

Neale Hickerson, a HollyFrontier spokesman at the company’s headquarters in Dallas, declined to comment on the company’s plans in the event of a strike.

The United Steelworkers said in a statement on the union website Jan. 28 that the lack of a more substantial response from companies during negotiations will “necessitate strike action at one or more locations when the collective bargaining agreements expire.”

Rotterdam, Netherlands-based LyondellBasell Industries NV will run the 302,300-barrel-a-day Houston refinery if there’s a strike, David Harpole, a spokesman for the company in Houston, said in an e-mail.

--With assistance from Barbara J Powell in Dallas. Editors: David Marino, Bill Banker

To contact the reporters on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net; Aaron Clark in New York at aclark27@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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