Fire damage at Exxon's second largest U.S. refinery leaves restart uncertain: sources

HOUSTON (Reuters) – Exxon Mobil Corp does not have a timeline for restarting fuel-producing units at its second-largest U.S. refinery following a fire Wednesday that cut production, sources said, as the shutdown boosted gasoline prices on Thursday.

A blaze on Wednesday cut output at Exxon’s 502,500 barrel-per-day (bpd) Baton Rouge, Louisiana, refinery. It was the third Exxon petrochemical plant along the U.S. Gulf Coast to suffer damage in less than a year.

No injuries were reported from the fire that broke out from a natural gas pipeline shortly before midnight on Tuesday and burned for about seven hours on Wednesday, one of the sources said.

The blaze affected pipes laid on racks 50 feet in the air, and forced the shutdown of multiple units at the oil refinery and adjoining chemical plant, the sources said. The fire hit crude distillation units that process crude oil into feedstocks for gasoline and other fuels.

The pipes surrounding the one that burned were damaged. Most of the other pipes supply feedstocks from the refinery to the chemical plant.

Operations at the refinery and chemical plant continue, Exxon spokesman Jeremy Eikenberry said on Thursday. He declined to discuss the status of individual processing units.

Exxon was meeting contractual commitments and expected to meet all customer commitments, he said.

The company and other refiners are suffering from weak margins due to excess supplies and falling demand for some fuels. Exxon U.S. refining profits fell 42% last year over 2018 due to weak margins and higher maintenance costs.

More units at the refinery and chemical plant were shut on Wednesday night as feedstocks were depleted.

CDUs are the heart of the refining process, providing the primary breakdown of crude oil into hydrocarbon feedstocks that other production units convert into motor fuels and feedstocks for plastics.

Traders on the New York Mercantile Exchange attributed a jump in gasoline futures since Tuesday to the combined impact of a gasoline-producing unit outage last week at the Phillips 66 Bayway refinery in Linden, New Jersey, and the fire at Exxon’s Baton Rouge refinery.

U.S. gasoline futures on the New York Mercantile Exchange opened at $1.5934 per gallon on Thursday, up 4.6% from the start of Tuesday’s session.

The blaze was the third major fire to hit Exxon’s U.S. operations since last March. A fire broke out in a unit at the company’s Baytown, Texas, plant, its largest U.S. refinery, with a processing capacity of 560,500 bpd.

Last July, 37 workers were injured and residents living near the Baytown refining and chemical plant complex were forced to shelter indoors when a fire erupted from Exxon’s olefins plant.