The Oil Spillover Effect : State’s Refineries Foresee Shortages Unless Alaska Oil Flow Resumes Soon

A massive oil spill that forced the closing of an Alaskan port has California oil refiners bracing themselves for possible shortages of crude oil if shipments do not resume quickly, say company officials.

“If it stays closed for a couple of days it would disrupt supplies,” said Chevron spokesman Mike Libbey. “Several days of that and you will start seeing gasoline shortages on the street.”

“We don’t anticipate any impact assuming that the port opens for tanker traffic shortly,” said Arco spokesman Al Greenstein. If Valdez remains closed, however, “that’s a whole different ball game,” he said.

The shutdown of the port of Valdez, closed since late last week, has drawn attention to how dependent California has become on Alaskan crude oil.

California refineries rely on the state’s own reserves for about 60% of their supply of crude oil--Alaska accounts for nearly all of the remaining 40%. About one out of three cars in California runs on gasoline refined from Alaska’s North Slope crude, according to Arco.

“There is a very delicate balance of supply and demand,” Steve Shelton, president of the Southern California Service Station Assn. “It doesn’t take much to knock it out of whack.”

The California Energy Commission estimates that 20 million to 30 million barrels of Alaskan oil are in transit to the state refineries, which have another 20 million barrels in stock.

Chevron refineries along the West Coast, including those in El Segundo and Richmond, Calif., would gradually begin to cut back production if Valdez remains shut down today, Libbey said.

Industry officials say Arco, the state’s largest gasoline retailer, is in a particularly tight spot since the recent temporary closure of a refinery in Cherry Point, Wash., for maintenance has left it with a smaller reserve than normal. Arco estimates that its refinery in Cherry Point and one in El Segundo have about a week’s supply of crude on hand.

Arco has four tankers waiting outside of Valdez, said Greenstein, who also said the company might be able to tap into a tanker loaded with a shipment of oil owned by Standard Oil of Ohio.

Arco said the U.S. Coast Guard is expected to open Valdez today on a limited basis. Tankers will be allowed to enter and exit one at a time, Arco says.

Despite Arco’s expectations, industry officials said delivery schedules have already been interrupted. It takes tankers about 24 hours to be filled at Valdez and another six days to reach California ports, say industry officials.

Chevron said a tanker scheduled to arrive next week was still waiting outside of Valdez Monday and will probably be late. However, a Chevron tanker that departed just before the port closed was expected to have unloaded in Richmond early this morning.

California, which consumes about 2 million barrels of oil daily, is relatively isolated from other domestic sources of crude oil. Only two oil pipelines connect California with the rest of the nation and those pipes are designed to transport oil out of the state.

The lack of domestic connections might force California to turn to more expensive sources of foreign oil if Valdez remains closed, say industry analysts. Currently, foreign imports--mostly from Indonesia--make up only 5% of the state’s supply of crude oil, according to state figures.

“The West Coast is essentially an energy island separated from the rest of the country,” said one industry official. “We have plenty of oil with supplies from Alaska, but without it, that’s when we have a problem.”

* Nearly 40% of all crude oil refined in California comes from Alaska’s North Slope.

* Nearly one of every three cars on California highways operates on gasoline refined from Alaskan oil.

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