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Bakersfield refinery may be idled indefinitely

Big West is unable to buy the crude to keep the facility running. Job cuts are imminent.

January 29, 2009|Marla Dickerson

A financially troubled Bakersfield refinery appeared headed for a prolonged shutdown after management on Wednesday informed workers that it hadn't been able to cut a deal with crude oil suppliers to keep the facility operating.

The plant, owned by Big West of California, has been crippled by the Dec. 22 bankruptcy filing of its parent, Flying J Inc. of Ogden, Utah. Management began shutting down operations in late December after suppliers stiffened credit terms, and it couldn't come up with cash to buy inventory.

"We will be winding down operations at the facility," while negotiations continue with suppliers, Fred Greener, Big West executive vice president, wrote in a memo to union workers.

That means job cuts are imminent, said Kevin Cable, committee chairman for the United Steelworkers, which has 140 members working at the plant with 100 contract employees. Consumer advocates have been sounding the alarm about the Bakersfield plant, which supplies about 2% of the state's gasoline and 6% of its diesel -- enough to affect prices in California, where refining capacity is perpetually tight.

"If this plant shuts down permanently, gas and diesel prices are going to rise in California," said Judy Dugan, a spokeswoman for Consumer Watchdog.

The Santa Monica activist group has raised concerns to state officials that Shell Oil, a major crude supplier to Big West, may be withholding supply from the refinery. Shell is the former owner of the Bakersfield refinery and tried to close it several years ago before being forced by the state to sell it to boost competition. Christine Gasparac, a spokeswoman for the California attorney general's office, confirmed that the agency's antitrust section was investigating "whether [Shell] illegally refused to sell crude to Flying J or shut off pipeline access."

Shell could not be reached for comment.

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marla.dickerson@latimes.com

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