Exxon Mobil defends handling of Torrance refinery outage

[August 20, 2016]  By Liz Hampton

HOUSTON (Reuters) - Exxon Mobil <XOM.N> has defended its handling of an outage at its Los Angeles refinery following a blast in February 2015 after a prominent trading company told a state commission that the process had lacked transparency.

Speaking before a committee of the California Energy Commission on Tuesday, Brad Lucas, a West Coast trader for Vitol [VITOLV.UL], said that lack of information about the restart of the refinery made it difficult to time cargo deliveries into the West Coast market.

Lucas said at the meeting that "In my opinion, there was a lack of transparency with what was going on with Torrance."

He said Exxon kept saying the Torrance refinery would come back online "next month".

The explosion at Exxon Mobil's 149,500 barrel-per-day Torrance refinery, which provides about 10 percent of California's gasoline supply, knocked a gasoline-producing unit offline for more than a year.

The higher prices created an incentive for traders to import fuel into California, but only if they could gauge when prices might fall after a refinery restart.

"ExxonMobil is committed to the highest standards of business conduct and rejects these allegations," ExxonMobil said in an emailed statement on Thursday. "We have operated responsibly and in strict compliance with all laws."

Vitol said in a statement on Friday "there was a lack of clarity regarding the restart date for the refinery," but added that it had "never suggested the lack of clarity was the responsibility of ExxonMobil, nor that ExxonMobil mislead (stet) the market."

The meeting by the Commission's Petroleum Market Advisory Committee was to discuss gasoline price volatility and policy alternatives to mitigate price spikes.

Refinery units are heavily damaged after an explosion at the Exxon-Mobil refinery in Torrance, California, February 18, 2015. REUTERS/Bob Riha Jr.

PBF Energy <PBF.N> acquired the Torrance facility from Exxon on July 1.

California Attorney General Kamala Harris issued subpoenas to refiners in the state in May as part of a probe into whether they manipulated gasoline prices since 2014.

In July 2015, refinery outages and tightened supplies pushed Los Angeles wholesale CARBOB gasoline prices to record levels of more than a $1.30 a gallon premium to the U.S. RBOB futures contract <RBc1>.

Kinder Morgan, which operates pipelines and terminals, also spoke at the hearing.

(Editing by Terry Wade and Matthew Lewis)

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