Storm damage hits gas supply

Tesoro is uncertain when a refinery unit will again be able to produce

The state's largest refinery said its lone gasoline-producing unit was damaged Sunday during a storm-related power failure and has been shut down for repairs.

Tesoro Corp. spokesman Nathan Hokama said the company is unable to determine when the unit will be operating again, but that the company is doing whatever it can to meet its contractual obligations.

He said Tesoro expects prices it pays for products to increase because of tight supplies and the price level required to attract supplies from alternative markets outside Hawaii.

Hokama said he could not say whether the increased costs that will be incurred by Tesoro will trickle down to consumers.

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Tesoro Corp., the larger of Hawaii's two refineries, said yesterday it is unable to determine when it will be able to start producing gasoline again after a Sunday storm and subsequent power failure damaged the facility's lone gasoline-producing unit.

Nathan Hokama, a Tesoro spokesman, said the company is doing whatever it can to meet its contractual obligations to supply gasoline, and that the Kapolei refinery has an average of about two weeks' supply at any given time.

"But that shouldn't be interpreted that we'll run out in two weeks, because that's not the case," he said.

"Tesoro is using its global presence in the product markets to assess the supply situation to try to meet our contractual commitments, which could include imports. In addition, existing suppliers (including Chevron) have extended their hand to help us during this period."

Chevron's plant is operating normally, according to spokesman Albert Chee.

Hokama said Tesoro expects prices it pays for products to increase because of tight supplies and the price level required to attract supplies from alternative markets outside Hawaii.

"It really just shows how vulnerable Hawaii would be to product supply and price fluctuations without its own refining capacity right here in the state," he said.

But Hokama said he could not say whether the increased costs that will be incurred by Tesoro will trickle down to consumers.

"We can't speculate what that will mean to consumers, because it really depends on what's happening in the marketplace," he said.

Hokama said the other major units shut down due to the power failure are expected to be brought back into operation today. Those units make such commodities as jet fuel, fuel oil and ship fuel. But the catalytic reformer unit, which produces gasoline, sustained damage and is shut down while it undergoes repairs.

"We're working as quickly and safely as possible to bring it back into service," Hokama said.

Tesoro, which has a throughput capacity of 95,000 barrels a day, said the rest of the Kapolei refinery's units will operate at reduced production rates during the repair period. The company said it now expects its Kapolei refinery throughput to be in the range of 70,000 to 80,000 barrels per day during the current quarter, instead of 80,000 to 85,000.