State’s Oil Refiners Expect No Cutbacks

California refiners have lined up replacement crude oil and don’t expect any cutbacks in gasoline production in the wake of last week’s closure of a key Alaskan oil field, state and industry officials said Wednesday.

BP abruptly halted production at the giant Prudhoe Bay oil field in Alaska after the company discovered extensive corrosion in pipelines that carry the crude. After initially shutting down 400,000 barrels a day of production, the company got permission to keep as much as 200,000 barrels of oil flowing daily while it makes other repairs.

The closure’s effect on gasoline prices has been a concern along the West Coast, which is dotted with refineries that rely on the Prudhoe Bay crude oil.

As much as 20% of the crude oil processed in California each year comes from the affected field in Alaska, with much of that used by five of the state’s 14 gasoline-making plants, according to the California Energy Commission.

“Refiners have been scrambling since Aug. 6 and 7 to identify alternative sources, and they have been quite successful,” Gordon Schremp, the commission’s gasoline expert, said Wednesday at a regularly scheduled energy commission meeting.

The refiners, he added, “believe that they’ll be able to bridge that gap successfully without reducing operations at California refineries.... That’s good news.”

Retail gasoline prices in California have held steady since the field shutdown. On Wednesday, the statewide average was $3.211 for a gallon of regular gas, down less than a penny from Tuesday’s average of $3.216, according to a daily survey by AAA. A month ago, the average stood at $3.251 a gallon.

“The fact that we haven’t seen, so far, a particularly strong reaction to the pipeline news gives us some hope that the market will absorb and adjust to this disruption without major adverse impacts to consumers,” said Joseph Sparano, president of the Western States Petroleum Assn.

“On the good-news side,” he said, “this is the end of August, and historically speaking, demand for gasoline in particular tends to begin slowing down” and that could also help ease any potential supply crunch.