UPDATE 1-Northeast US oil refineries start rate cuts ahead of Sandy

* Northeastern refiners begin unit rate cuts, consider shutdowns

* PBF starts to cut rates at some Delaware City units

* Pipelines begin to put storm plans into effect

* Coast Guard issues storm conditions for Mid-Atlantic

NEW YORK, Oct 28 (Reuters) - Oil refineries along the U.S. Atlantic Seaboard, having put their storm preparedness plans in place, began to cut rates on Sunday ahead of Hurricane Sandy' s expected landfall along New Jersey's barrier islands spurred by fears of power outages.

Hurricane Sandy, which is expected to come ashore late on Monday, could be the biggest storm to hit the U.S. mainland, bringing strong winds and dangerous flooding to the East Coast from the mid-Atlantic states to New England, forecasters said.

Six East Coast oil refineries representing 1.19 million barrels per day - or 7 percent of total U.S. capacity - could potentially be hit by the deadly storm, which has left at least 41 dead as it roared through the Caribbean and churned northward.

PBF Energy, which operates 190,000 barrel per day plant in Delaware City, began to cut rates by an unspecified amount on the crude unit, coker and gasoline-making fluid catalytic cracking unit as well as some downstream units, a source familiar with refinery operations said.

A spokesman for the company declined to comment on rate cuts, citing operational confidentiality.

``What I can tell you is that we continue to treat this storm seriously. We have comprehensive preparedness plans in place and will continue to follow them as well,'' said Michael Karlovich, a spokesman for the company.

PBF Energy owns and operates two East Coast refineries, the 190,000 barrels-per-day Delaware City plant and the 180,000 bpd Paulsboro plant in southern New Jersey, across the Delaware River from the Philadelphia area.

Meanwhile, Hess Corp said on Sunday it would begin to cut rates at its 70,000 barrel per day refinery in Port Reading, New Jersey, at 6 p.m. EDT (2200 GMT) as a precaution, a company spokesperson said on Sunday.

The storm threat boosted gasoline and heating oil futures as well as cash product prices in the New York Harbor over the past two sessions.

Some forecasters say Sandy has the potential to be a multibillion-dollar disaster, causing greater damage than last summer's Hurricane Irene. But it is still too soon to tell the storm's actual trajectory and refiners were taking early steps to prepare.

Phillips 66, owner of the 238,000 bpd Bayway refinery in Linden, New Jersey, said it is still monitoring the storm.

``All of our East Coast operations continue to operate normally while we prepare our facilities for the storm,'' said Rich Johnson, a spokesman for the company.

A source familiar with Bayway operations said that as of Saturday night, there were no units shut yet.


Hurricane Irene, which hit the region in August 2011, caused severe flooding and power outages all along the East Coast as well as some refinery disruptions. Phillips 66 closed its Bayway refinery while other refiners cut back rates, but the oil industry escaped Irene with relatively little, if any, damage.

In addition to Hess's Port Reading refinery, two other plants are potentially within the storm's path: Philadelphia Energy Solutions' 330,000 bpd Philadelphia refinery and Delta's Monroe Energy 185,000 bpd plant in Trainer, Pennsylvania.

The Trainer refinery continues to operate normally and should continue to do so as it expects to escape the brunt of the storm.

``At this time, we have not and do not anticipate changing operation at this juncture,'' said a source familiar with refinery operations. ``We are on the leeward side of the storm's path.''

At the Philadelphia refinery, now jointly owned and operated by Sunoco Inc and private equity firm Carlyle Group LP , they are monitoring the storm closely.

``Philadelphia Energy Solutions Refining Complex continues monitoring the storm closely,'' spokeswoman Cherice Corley said, adding they are following their hurricane preparedness plan.

A source familiar with refinery operations said the refinery, the largest in the region, has not cut rates.

Oil markets are watching for any potential disruptions to gasoline and heating oil supplies, as lean fuel stockpiles in the region make the East Coast vulnerable to price spikes, especially ahead of the winter heating season.

The Colonial Pipeline, which carries about 15 percent of the country's gasoline and diesel from Gulf Coast refineries up the New York Harbor, is preparing for the storm, according to spokesman Steve Baker.

The pipeline activated its hurricane preparedness plan on Friday afternoon and has already started making sure emergency generators are in place, as well as sandbagging critical areas which may be prone to flooding.

Buckeye Pipeline, which owns and operates about 6,000 miles of oil product pipelines mostly north and west of Philadelphia, has prepared a Hurricane Contingency Plan.

``Buckeye will continue to operate their pipelines as scheduled until the time that it is no longer safe to do so, or power or product availability make it no longer possible to run a particular line section,'' the company said in a statement.

``Buckeye has secured some generator capability that is being staged strategically to provide temporary power to certain pump stations,'' it said.

Vessels in and out of some southern and mid-Atlantic ports are operating under Coast Guard storm conditions.

In Hampton Roads, near the Plains All American's 6.6 million barrels crude and oil products storage facility in Yorktown, Virginia, coastal waters are closed and under code Zulu, the highest warning level. The warning extends from Virginia to the Maryland/Delaware border, with expectations of gale force winds within 12 hours.

The New York harbor is currently under Code Yankee, which expects gale force winds within 24 hours.

The CME Group said it will suspend floor trading on Monday at its NYMEX world headquarters because of mandatory evacuation by the city of New York ahead of Hurricane Sandy but the move is unlikely to affect trade as higher-volume electronic dealing will operate normally.