The Wall Street Journal: California Attorney General Urges Shell To Delay Refinery Closure

DOW JONES NEWSWIRES
April 23, 2004 6:49 p.m.

Posted 24 April 04

LOS ANGELES -- California Attorney General Bill Lockyer Friday called on Shell Oil Company (RD) to delay until Dec. 31 the closure of its Bakersfield refinery, and to aggressively seek a buyer in the meantime.

Delaying the closure by three months will help the region's farmers, who rely on diesel fuel for their equipment, through the harvest season, Lockyer said in a letter sent to Shell President Lynn Laverty Elsenhans Friday.

"Pledges to supply diesel from other sources after October 1, 2004, are too limited and fraught with risks - supply disruptions, diversions to other areas, selective deliveries or startup snafus - to safeguard farmers from disruptions to their harvest operations," Lockyer wrote.

The company should also leave "no stone unturned" in seeking a buyer for the refinery, which supplies the state with 6% of its diesel and 2% of its gasoline, Lockyer said.

"In California's extremely fragile market, those are large numbers. Few doubt the closure of the refinery will increase the cost of driving, living and doing business throughout California," Lockyer wrote.

California has some of the highest diesel and gasoline prices in the country, due in large part to a tight supply-and-demand balance.

Shell spokesman Cameron Smyth said the company will consider "any credible offer" for purchasing the refinery, but it hasn't yet received any. Shell still plans to close the refinery by October, he said.

"Shell will continue to make diesel fuel available to our contracted partners through the harvest season" via its other refineries in the state, Smyth said. "Unless we receive a credible offer to purchase the refinery, the plan is still to close it Sept. 30."  Lockyer has been investigating the Bakersfield refinery's closure for several months.

-By Jessica Berthold, Dow Jones Newswires; 323-658-3872; jessica.berthold@dowjones.com

http://online.wsj.com/public/page/0,,public_home_search,00.html