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U.S. refinery strike widens to include country's largest refinery

Members of the United Steelworkers Union and other supporting unions picket outside the BP refinery on February 10, 2015 in Whiting, Indiana.
Scott Olson | Getty Images

The U.S. refinery strike widened as workers at the nation's largest refinery walked off their jobs at 12 a.m. CST (0600 GMT) on Saturday, according to the United Steelworkers union (USW).

Shortly after talks between union and oil company representatives ended on Friday night, the union notified Motiva Enterprises of a strike by its members at the company's 600,250 barrel per day (bpd) refinery in Port Arthur, Texas.

The USW also gave notices on Friday of strikes to begin in 24 hours at Motiva's 235,000 bpd Convent, Louisiana and 238,000 bpd Norco, Louisiana refineries and the Shell Oil Co chemical plant in Norco, the union said.

"The industry's refusal to meaningfully address safety issues through good faith bargaining gave us no other option but to expand our work stoppage," USW International President Leo Gerard said in a statement.

Motiva is a 50-50 joint venture of Read MoreRoyal Dutch Shell Plc and Saudi Aramco. Shell's U.S. arm Shell Oil Co. is the lead oil company negotiator in talks with the USW for a national agreement on safety, pay and benefits.

A Shell spokesman said the company was disappointed by the Port Arthur walkout and strike notices to the Louisiana plants.

"We believe this move sets the wrong tone for both parties to move forward and reach an agreement," said Shell spokesman Ray Fisher. "We remain committed to continued safe operations and productive negotiations."

If no agreement is reached between Shell and the USW by early Sunday morning, a total of 6,550 workers at 15 plants, including 12 refineries accounting for 18.5 percent of U.S. production capacity, will be walking picket lines in the largest national refinery strike since 1980.

This is the first expansion of the strike since Feb. 6, when workers at BP Plc-operated refineries in Indiana and Ohio were told to begin a work stoppage the following day.

Workers are already on strike at Shell's 327,000 bpd joint-venture refinery in Deer Park, Texas, and an adjoining chemical plant. The Deer Park workforce walked out when the strike began on Feb. 1.

The strike may complicate operations at the Port Arthur refinery, which failed to restore its second largest crude distillation unit (CDU) to full production after restarting on Friday following a three-day shutdown to fix leaking piping, sources told Reuters.

The 195,000 bpd CDU is one of three at the refinery that do the initial refining of crude oil coming into the plant and provide feedstock for all other production units.

The refinery's largest CDU, which has a rated capacity of 325,000 bpd is running at about 200,000 bpd, the sources said, because a 60,000 bpd hydrocracking unit is shut due to a malfunction. The hydrocracker produces motor fuel, primarily diesel, which has become a lucrative export for U.S. refiners.

Motiva is also overhauling the 92,000 bpd gasoline-producing fluidic catalytic cracking unit at the refinery. It is scheduled to restart in the first half of March. It was shut in early January.

Shell and the union have been meeting continuously since talks resumed on Wednesday following a week-long break for the company to reply to an information request and a counterproposal from the USW.

Union negotiators rejected the seventh contract offer from Shell on Thursday night.

Earlier this week, the USW's lead negotiator, International Vice President Gary Beevers, told Reuters that safe staffing levels at refineries and chemical plants were a sticking point in the talks.

Another sticking point is the absence of no-retrogression language, which preserves agreements from previous contracts not addressed in negotiations this year.

In addition to the two BP-operated plants, workers are striking at refineries and plants owned by Lyondell Basell, Marathon Petroleum Corp., and Tesoro Corp. in California, Kentucky, Texas and Washington state.

Only one refinery has shut down due to the strike.

Tesoro's 166,000-bpd plant in Martinez, California, was scheduled prior to the strike for a partial shutdown to perform a planned multi-unit overhaul.

Company officials decided to idle the entire plant after the walkout began and said production would not resume during the work stoppage.

The USW is seeking a three-year, industrywide pact that would cover 30,000 workers at 63 U.S. refineries that together account for two-thirds of domestic capacity.

Companies have called on temporary replacement workers to keep plants running at nearly normal levels.