Saturday, May 14, 2011

Exxon cuts La. refinery production by 9.9%

By Ben Lefebvre

(Updates with background on flood and Morganza spillway in paragraph 6, Magellan terminal shutdown in paragraph 7 and wholesale gasoline prices in paragraph 8.)

HOUSTON (MarketWatch) -- Exxon Mobil Corp. /quotes/comstock/13*!xom/quotes/nls/xom XOM -0.22% cut production at its 504,000-barrel-a-day refinery in Baton Rouge, La., by 50,000 barrels a day as the flood-swollen Mississippi River hindered its ability to bring in crude oil, a person familiar with the refinery's operations said.

The person said that Exxon could be forced to reduce production by an additional 50,000 barrels a day if the situation deteriorates further. The refinery is the second-largest in the U.S. after Exxon's 560,000-barrel-a-day refinery in Baytown, Texas.

The person said that Exxon has completely closed the docks that allow the company to receive and send out barges and tankers on the Mississippi. "All dock personnel have been evacuated and the power cut," the person said. "The last ship went out last night."

However, Exxon spokesman Kevin Allexon said the company hasn't yet closed its docks. He declined to comment on the refinery production rates.

Exxon said earlier in the day that it was shutting and emptying some of its oil pipeline segments near Baton Rouge because of concerns about Mississippi River flooding.

Heavy rains and snowmelts have caused the Mississippi to rise eight feet higher than its flood stage in Baton Rouge. The U.S. Army Corps of Engineers is poised to open the Morganza Floodway north of the city as soon as Saturday to help lower the river level by diverting water to the Atchafalaya Basin east of the city.

The flooding has congested river traffic and caused some fuel terminals to shut down as their docks take on water. Magellan Midstream Partners LP (MMP) closed two of its terminals along the Mississippi River in Louisiana Friday morning because of flood concerns, the company said.

Fears of the flood's disruption to fuel supplies has helped raise wholesale gasoline prices to $3.0744 a gallon Friday, up a cent from the day before.

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