RICHMOND -- Chevron said Wednesday it has finished repairs and replacement work on a crucial unit at its vast Richmond refinery that was damaged in a fire last August, but that regulatory approvals will delay its reopening at least until June.
If all goes well with final regulatory approvals, the refinery will be back on line by the end of June, it said, which would be later than prior estimates the energy giant had provided in public disclosures.
In late January, a state Division of Occupational Safety and Health issued 25 citations against Chevron and slapped it with a nearly $1 million fine -- the highest amount allowed by state law -- in connection with the fire.
Cal/OSHA claimed that Chevron did not follow the recommendations of its own inspectors and metallurgy scientists to replace the corroded pipe that ultimately ruptured and caused the fire. It also claimed that Chevron did not follow its own emergency shutdown procedures when the leak was identified and did not protect workers at the leak site.
"We are waiting to complete the final regulatory steps required to restart the crude oil processing unit," said company spokesman Sean Comey. "We expect to resume normal operations in the second quarter of this year."
Several months ago, Chevron estimated it would have the crude unit, described by experts as the heart of the refinery, back on line by the end of March. The current estimate would push the restart to as late as the end of June.
"It sounds like Chevron is saying they are on uncharted ground with the regulators," said David Hackett, president of Irvine-based Stillwater Associates, a transportation energy consultancy. "They seem to be saying it will take another three months to sort things out with the regulators."
The restart date could be pushed back further, said Bob Van Der Valk, a Montana-based oil industry analyst. "They will have trouble convincing the regulators in a timely fashion," he predicted.
"California has been a challenging market for refiners in general," said Pavel Molchanov, an analyst with Raymond James, an investment firm. The state's low-carbon fuels standards and tight sulfur emission rules "are challenges for refineries such as Richmond," he added.
Nevertheless, the rewards outweigh the challenges of meeting the high standards, Molchanov opined.
"Refineries in California are still profitable," he said. "It is certainly much better to have a plant up and running than undergoing repairs. There is no question about that at all."
The Richmond refinery has been operating at about 60 percent capacity in the wake of the fire.
Spokesman Comey said Chevron has "begun to implement certain measures to strengthen process safety, mechanical integrity and management oversight, both at our Richmond refinery and across our manufacturing network as appropriate."
Contact George Avalos at 408-373-3556 or 925-977-8477. Follow him at Twitter.com/george_avalos.