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Shell Studying Offers for Its Bakersfield Site

September 23, 2004|Elizabeth Douglass | Times Staff Writer

Shell Oil Co. said Wednesday that it was evaluating proposals from several companies that want to buy its Bakersfield refinery, a profitable facility the oil company had targeted for closure.

Shell also acknowledged that the company intended to sell the facility without valuable components such as certain pipelines and on-site storage tanks -- conditions the company said "reflect market realities."

Last week, The Times reported the sale restrictions, which people familiar with the situation said were unusually restrictive and would limit interest in the refinery. At the time, Shell said confidentiality agreements prohibited the company from discussing its sale conditions.

State officials and politicians, alarmed by Shell's plan to shutter the refinery, have been pressuring the oil company to sell it. The Bakersfield plant makes 2% of California's gasoline and 6% of its diesel, and officials worry that its closure would worsen the state's chronic supply troubles and lift prices at the pump.

Shell initially made no effort to sell the facility, and repeatedly told lawmakers and others that no one would want it, especially because the company intended to keep the refinery's crude oil contracts. On Wednesday, Shell said more than 70 parties had expressed interest in the Bakersfield refinery, and that 20 signed confidentiality agreements so they could dig deeper into the plant's books.

Several companies submitted bids "stating the price they would pay for the refinery and any additional terms and conditions they would propose," according to a statement released by Shell, the U.S. unit of Anglo-Dutch company Royal Dutch/Shell Group.

The company set no deadline for a sale deal, but pledged to continue negotiations as long as they are "warranted by the progress of our discussions," spokesman Stan Mays said. Mays declined to be interviewed for this story, but provided written answers to questions.

Mays said the sale would include some large storage tanks, but not all of them. Shell said it would negotiate a long-term lease with the buyer for use of the fuel terminal, tanks and pipelines not included in the sale.

If no deal is reached, Shell said it would close down the refinery March 31, or by the end of the year if it couldn't get the necessary waiver from the Environmental Protection Agency to stay open into 2005. Shell originally planned to shut the plant Oct. 1, but postponed the closure to allow more time for negotiations with possible buyers.

"This is a far cry from Shell's statement that no one would want this facility," said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. With so much interest, "I don't think Shell can announce that they couldn't finalize a deal without regulators asking why."

Sen. Barbara Boxer (D-Calif.), who helped prompt a probe into the refinery issue by the Federal Trade Commission, was less enthusiastic about Shell's latest announcement.

"Whatever Shell says is one thing. What they do is another," she said Wednesday. "And everything they do leads me to believe that they want to avoid the sale of this refinery."

In response to her concerns, FTC Chairwoman Deborah Majoras told Boxer that the delayed closure allowed the commission "to investigate more thoroughly all aspects of the Bakersfield refinery situation." In a letter Tuesday to Boxer, Majoras assured the senator the FTC's probe was moving forward "expeditiously."

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