Shell Asked to Keep Oil Refinery Operating

California Atty. Gen. Bill Lockyer, citing a need to ensure adequate supplies of diesel fuel to San Joaquin Valley farmers during the coming harvest, Friday asked Shell Oil Co. to postpone its scheduled Oct. 1 closure of a refinery in Bakersfield.

Lockyer, who has ordered an investigation into whether the proposed shutdown violates state antitrust laws, also asked Shell to more aggressively seek a buyer for the 70,000 barrel-a-day facility.

Barring that, the attorney general, in a letter to Shell Oil Products U.S. President Lynn Laverty Elsenhans, demanded the company take steps for adequate supplies of diesel and gasoline to be shipped from a Bay Area refinery in Martinez to the southern San Joaquin area.

Although the Bakersfield refinery produces only 2% of the state’s gasoline and 6% of its diesel, its shuttering could unbalance a “fragile market” and “increase the cost of driving, living and doing business in California,” Lockyer wrote.

Shell Oil and Shell Oil Products are units of petroleum giant Royal Dutch Petroleum Co.

Shell executives say they must close the refinery because it’s running out of crude from nearby oil fields. Critics, however, contend the planned shutdown has more to do with boosting profit at Shell’s two other refineries in California.

Shell spokesman Cameron Smyth said he could not comment on Lockyer’s request to delay the closure until Dec. 31. However, he said the company “would entertain any credible offers made on the refinery” and “would continue to make diesel fuel available to our contracted parties through the harvest season and beyond.”

To date, Shell has not received any purchase offers, Smyth said. Critics claim that the property is unattractive because Shell is refusing to sell any of its San Joaquin crude-oil production wells.

Jamie Court of the Santa Monica-based Foundation for Taxpayer and Consumers Rights has threatened to sue Shell under the state’s Unfair Competition Law if Lockyer fails to take action.