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Chevron Says It Will Drop California Refinery Output By David Ward

San Francisco, June 5 (Bloomberg) -- Chevron Corp. told California Governor Gray Davis that the threat of blackouts in the state will force it to reduce production at two plants and run off electricity the company produces itself.

Chevron, the state's largest refiner of reformulated gasoline, plans to reduce yield at two plants to make sure the plants do not need to rely on electricity from the state's utilities, Chevron said in a letter to Davis signed by Chief Executive David O'Reilly. The company did not say how much it would lower production.

Chevron had appealed to the state Public Utilities Commission for an exemption from blackouts, arguing that an inability to run its plants at full capacity would increase a shortage of gasoline and other fuels in the state. The CPUC rejected that petition.

``In the absence of CPUC or legislative action to remove the threat of rotating outages from refineries and critical fuels infrastructure, Chevron will be forced to operate our refineries at less than full capacity,'' the letter said.

Chevron has two refineries in California, one in the Bay Area in the City of Richmond that can refine up to 225,000 barrels of crude oil a day and a second in Ed Segundo in Southern California that produces up to 260,000 barrels a day, spokesman Fred Gorell said. The plants produce primarily gasoline, diesel, and aviation fuels, Gorell said.

Other Refiners

California may face more than 30 days of rolling blackouts across the state this summer due to a shortage of electricity coupled with rising demand due to hot weather.

Other oil company executives have warned that rotating blackouts threaten to force refiners in the state to reduce or cease their operation.

``In California, these rolling blackouts have significant potential issues with regard to places like refineries and chemical plants,'' Exxon Mobil Corp. Chief Executive Lee Raymond said in April. ``If you only have five minutes before someone tells you they're going to shut down your power, eventually one of these refineries is going to blow up.''

Steve Maviglio, a spokesman for Governor Davis, declined to comment.

http://quote.bloomberg.com/fgcgi.cgi?T=marketsquote99_news.ht&s=AOx1HmhYRQ2hldnJv

-- Martin Thompson (mthom1927@aol.com), June 05, 2001

Answers

This is really bad news for Californians. How much more can they stand?

-- Nancy7 (nancy7@hotmail.com), June 06, 2001.