Energy Dept. to ask U.S. refiners to delay maintenance--heating oil stocks down 70% from last year

WASHINGTON (Reuters) - The Department of Energy will ask U.S. refiners to delay shutting down facilities for routine seasonal maintenance and instead ramp up their production of heating oil for the winter, a top department official told lawmakers Wednesday.

Energy Secretary Bill Richardson will make the request during a special meeting with refiners this week, said Robert Kirpowicz, the Department's Acting Assistant Secretary for Fossil Energy.

"A delay of maintenance would not be a problem," Kirpowicz told members of the Senate-House Joint Economic Committee during a hearing on the Strategic Petroleum Reserve.

President Clinton last Friday ordered that 30 million barrels of crude be released over 30 days from the nation's Strategic Petroleum Reserve (SPR) to ease tight heating oil supplies and high energy prices.

Kirpowicz said more refinery production is needed, especially in light of new data released today from the Energy Information Administration that showed New England heating oil stocks now total just 4.9 million barrels, down 70 per cent from the same period a year ago.

"We, indeed, are in a very tight inventory situation," he said.

The Northeast is the world's largest heating oil market, and accounts for two-thirds of U.S. heating fuel consumption.

To protect the Northeast against a disruption in heating fuel supplies this winter, the Clinton administration is also setting up a 2-million-barrel emergency heating oil reserve. Kirpowicz said half of the reserve is already filled and the rest of the heating oil will be delivered in early October.

However, Kirpowicz admitted that the oil release would do little to lower prices in the long term. "A 30-day release of oil from the SPR will only have a temporary effect on prices," he told lawmakers.

He said it will take several months for all the SPR oil to be shipped to refiners and processed into heating oil, and consumers won't see the end product in their home heating fuel tanks until the end of December.

The first shipments of reserve oil to refiners should be begin in mid-October, he said.

Kirpowicz also said once the oil is in the market, the administration will review how the crude has affected supplies and prices, and then decide whether the reserve should be tapped again.

"At the end of 30 days or sooner ... we'll reevaluate our position," he said.

http://www.canoe.ca/MoneyOilTemp/sept27_usrefiners-rtr.html

-- Carl Jenkins (Somewherepress@aol.com), September 29, 2000