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Refiners, Workers Resume Contract Talks; Strike Looms




By Barbara Powell and Aaron Clark

Jan. 31 (Bloomberg) — Royal Dutch Shell Plc and the union representing refinery workers resumed talks on a new contract today as a deadline loomed and the companies made preparations for a strike that may affect almost two-thirds of U.S. capacity.

Shell, which is negotiating for the refiners, is “optimistic” it can reach a “mutually satisfactory agreement” with the United Steelworkers union, Stan Mays, a company spokesman, said in an e-mail today. The union, which represents workers at 86 plants, rejected the latest company offer early yesterday. Talks are taking place in Austin, Texas.

“While our focus is on reaching an agreement, we do have plans to safely operate in the event of work stoppages,” said Mays. Lynne Baker, a spokeswoman for the union, characterized the talks yesterday as “difficult” and “progressing slowly.”

Shell offered workers a three-year contract with a $500 signing bonus and 2.5 percent wage increases in the second and third years, according to a Jan. 28 memo distributed by the union. Employees would receive a 75 cent-an-hour increase in the first year. Members have authorized a strike. The contract expires at 12:01 a.m. tomorrow.

“They went back in negotiations at 9 a.m. and they continue to make slow progress,” Baker said today. “But it is progress nonetheless.” She said the talks are still focusing on safety and health-care issues.

Valero Prepares

Valero Energy Corp., the largest U.S. refiner, has a contingency workforce on site at its Port Arthur, Texas, refinery, said Bill Day, a company spokesman, in an interview. It’s made up of non-union workers and managers, he said.

Valero plans to keep Port Arthur open if there is a strike and shut its refineries in Delaware City, Delaware, and Memphis.

“We have agreements with the unions at Memphis and Delaware City that if they call for a work stoppage, employees will stay on the job for 72 hours to help complete a safe and orderly shutdown of the plants,” Day said.

The Memphis refinery can process about 182,000 barrels of oil a day, according to Energy Department data. The Delaware City plant can process 190,200 barrels a day, while the Port Arthur plant can process about 294,000 barrels a day.

BP Plc, Europe’s second-largest oil company, has estimated that a walkout could affect four of its U.S. refineries processing about 1.3 million barrels of crude a day, said Scott Dean, a spokesman. The company plans to shut plants where there is a strike.

Contingency Plans

Lyondell Chemical “continues to bargain in good faith and will continue as long as we make progress,” David Harpole, a company spokesman, said today. About 500 of the 950 workers at its Houston refinery are union members.

Lyondell has been training salaried personnel for the past year to be replacement workers “who can safely operate the refinery” in the event of a strike, Harpole said. “They are able to take over if necessary. There would be no impact to operations.”

Shell and Exxon Mobil Corp. are preparing to keep their U.S. plants running in a walkout, using managers and other non-union employees to keep sites operating. Prem Nair, a spokeswoman for Exxon Mobil, the world’s largest fuel maker, declined to comment today on the status of the negotiations.

Chevron Corp., the second-biggest U.S. oil company, may keep operating its refineries in the event of a strike.

A strike could affect 58 percent of U.S. refinery workers and about 64 percent of the nation’s fuel-making capacity, said Baker, the spokeswoman for United Steelworkers. The current contract was reached in 2002 and was extended in 2005.

The union’s national bargaining policy calls for higher wages, including a cost-of-living adjustment, as well as full medical, dental and vision-care benefits for workers and retirees. Local unions also may call strikes if they don’t reach agreement on issues such as work schedules and overtime.

To contact the reporters on this story: Aaron Clark in New York at[email protected]Barbara Powell in Dallas at[email protected]

Last Updated: January 31, 2009 13:11 EST

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