Business

Wednesday, Nov 07 2012 05:02 PM

Alon refinery shutting down again; jobs impact unclear

BY JOHN COX Californian staff writer jcox@bakersfield.com

The Alon refinery on Rosedale Highway is shutting down again because of high West Coast oil prices and weak demand for asphalt produced by its sister refineries in Los Angeles County, the plant's Dallas-based owner announced this week.

Alon USA Energy Inc. CEO Paul Eisman said the Bakersfield plant is expected to reopen as soon as late 2013, after it receives permission to reconfigure the refinery to accept light, inexpensive "mid-continent" oil by rail from North Dakota and its neighboring states.

"We're looking at alternatives to reduce or compress the time required to get the necessary permits. But the longest permits, that might be required to take up to a year to get," Eisman told analysts in an earnings conference call Tuesday.

Eisman also confirmed for the first time that the company intends to resume processing crude oil in Bakersfield, as previous owners of the plant have done. As it stands, the refinery processes vacuum gas oil hauled by truck and rail from L.A. County. Gas oil is a refining byproduct that the Bakersfield plant turns into diesel, gasoline and other products.

Previously Eisman had spoken of returning to crude refining in Bakersfield only as a possibility.

Given Alon's "disappointing" third-quarter financial results in California, Eisman said, "we are electing to temporarily suspend refining operations on the West Coast while we reconfigure the Bakersfield refinery to receive and operate on lighter mid-continent crude oils."

Processing lighter grades of crude would allow the company to move away from asphalt production in its Long Beach-area refining complex. It would position the company to make more diesel and gasoline, which lately have proved to be more profitable than asphalt.

The Bakersfield refinery reopened in June after a six-month closure attributed to difficult refining margins. The plant has not operated for 12 consecutive months since 2008.

About 100 people work at the refinery. It was unclear how many jobs could be affected by the latest shutdown.

"It's my understanding that the matter of staffing is being evaluated so there is no estimate of how many jobs will be impacted at this time," Alon spokesman Blake Lewis wrote in an email Wednesday.

Eventually the company plans to stop accepting mid-continent crude in favor of relatively light Central Valley oil from the Monterey Shale, Eisman said.

The shutdown of Alon's California operations will cost the company between $21 million and $25 million, Eisman told analysts.

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