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Shell weighs staff cuts at U.S. Gulf refineries


Fri Jul 17, 2009 12:54am EDT

By Erwin Seba

HOUSTON (Reuters) – Shell Oil Co said on Thursday it was considering staff cuts at its refineries and chemical plants on the U.S. Gulf Coast to reduce costs in the current recession.

Among the plants where reductions are being considered are the refineries Shell operates jointly with Saudi Aramco through Motiva Enterprises and a Deer Park, Texas, refinery operated jointly with Mexican state oil company Pemex, said spokeswoman Anne Peebles.

“It’s going to be different at every site,” Peebles said. “We’re going to do this on a site by site basis.”

Shell has no plans to sell any of its refineries and chemical plants, contrary to rumors circulating in the communities where they are based, she said.

Shell Oil’s corporate parent Royal Dutch Shell Plc has previously said thousands of staff could be eliminated worldwide to cut costs, but the reduction plans discussed so far have focused on global upstream operations, which were reorganized earlier this year, and corporate headquarters in the Hague, Netherlands.

In January, Motiva pushed back by two years the completion date for a planned 325,000-barrel-per-day (bpd) expansion at the 285,000 bpd Port Arthur, Texas, refinery to 2012.

Last week, Shell said it may close or sell its Montreal East refinery in Canada.

The total number of positions that may be eliminated has not been determined. The reductions could include salaried, hourly and contract workers, Peebles said.

The recession has hit some of Shell’s refineries hard, with the 235,000 bpd Motiva refinery in Convent, Louisiana, losing money for a year, according to sources familiar with Shell’s operations.

Positions to be eliminated were identified by Shell using internal formulas to set staffing levels, according to a source familiar with Shell’s plans.

Reducing staff could increase risk of worker fatigue at the plants. Fatigue was identified as a factor in the deadly 2005 explosion at BP’s giant Texas City, Texas, refinery.

“We’re going to be looking to ensure our sites remain safe,” Peebles said.

Shell Chemical has major manufacturing plants in Mobile, Alabama; Geismar and Norco, Louisiana, and Deer Park, Texas.

In addition to the Port Arthur and Convent refineries, Motiva operates a 236,400-bpd refinery in Norco, Louisiana.

Deer Park Refining, Shell and Pemex’s 50-50 joint-venture, operates the 329,800 bpd refinery in the Houston suburb of Deer Park, Texas. The Deer Park refinery is the ninth-largest in the United States.

(Editing by Michael Urquhart)

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