SAN RAMON -- Chevron's Richmond refinery, hobbled since early August by a disastrous fire, is expected to resume full production sometime during the first three months of next year, Chevron executives said Friday, which could spell relief from high gasoline prices for California drivers.
"The crude unit remains offline. We have an expected startup during the first quarter of 2013," Mike Wirth, executive vice president for downstream and chemicals operations for Chevron, told analysts during a conference call to discuss the company's weaker-than-expected earnings for the third quarter.
An investigation continues into what caused a crucial pipe to corrode, contributing to an equipment failure that triggered the fire at the crude unit, which is central to the vast East Bay refinery's operations.
"This is the most definitive statement we've made about a startup of the unit," said Kurt Glaubitz, a Chevron spokesman.
The company has estimated that production is at 60 percent of capacity at the 245,000-barrel-a-day plant, one of the largest on the West Coast.
"Chevron wants to get that back up and running as soon as possible, not only for the company's sake, but for the sake of California motorists," said Brian Youngberg, an analyst with investment firm Edward Jones. "The fire has made gasoline supplies in California pretty tight."
Three months after the fire, gasoline prices in the Bay Area on Friday averaged $4.03 a gallon,
The company intends to continue operating its Richmond and Southern California refinery in El Segundo despite what is generally considered a rough regulatory environment in the Golden State, Wirth said.
"The West Coast refinery business is a core business," he said. "These refineries are big, and they are more profitable than the competition. We have weathered the cycles here. We can make a go of it in California if anybody can."
Chevron executives warned that Assembly Bill 32, officially known as The Global Warming Solutions Act of 2006, will cause gasoline prices to spike in California.
"It will raise costs for operating in California initially by hundreds of millions of dollars a year and then by billions of dollars a year," Wirth said. "All of those higher costs have to go through to the gasoline market. We can't absorb those higher costs. We won't absorb those higher costs."
San Ramon-based Chevron earned $5.25 billion during the third quarter that ended in September, down 32.9 percent from the year-ago July-September quarter. Per-share profits totaled $2.69 a share. Wall Street had expected a profit of $2.83 a share.
"Crude oil prices were down, and we had a heavy period of planned oil field maintenance, which temporarily reduced oil and gas production," Chevron CEO John Watson said in a prepared release.
Chevron expects production to improve in final months of this year.
"The company is getting into the final phases to get these projects online," said Robbert van Batenburg, head of equity research at Louis Capital Markets.
New oil and natural gas fields are also making considerable progress in Australia, Sierra Leone, the Gulf of Mexico and New Mexico.
"Chevron has a lot of long-term growth potential," Youngberg said. "They have a lot of projects. That growth will really kick in during 2014. Australia is the cornerstone for all that."
Contact George Avalos at 925-977-8477. Follow him at Twitter.com/george_avalos.