US oil workers strike enters second day

San Francisco

THE strike by oil workers at plants accounting for 10 per cent of US refining capacity entered a second day on Monday in the biggest walkout since 1980.

The United Steelworkers (USW) union that represents employees at more than 200 refineries, terminals, pipelines and chemical plants stopped work on Sunday at nine sites after failing to agree on a renewed labour contract. The union rejected five offers made by Royal Dutch Shell plc on behalf of companies including Exxon Mobil Corp and Chevron Corp since talks began on Jan 21.

The USW hasn't called a strike nationally since 1980, when a stoppage lasted three months. While only one of the nine plants has curbed production amid the stoppage, a full walkout of USW workers would threaten to disrupt as much as 64 per cent of US fuel output. Shell and union officials began negotiations amid the biggest collapse in oil prices since 2008.

"If the strike escalates, that would be detrimental to the oil price," David Lennox, a resource analyst at Fat Prophets in Sydney, said. "It will put high US production out on the market and there is nowhere for it to go."

US benchmark West Texas Intermediate oil fell as much as US$1.57 a barrel, or 3.3 per cent, to US$46.67 in electronic trading on the New York Mercantile Exchange in early trade on Monday. It jumped 8.3 per cent on Friday, the biggest one-day advance since June 2012. Petrol for March delivery slid 2.33 US cents a gallon, or 1.6 per cent, to US$1.4555, and the diesel contract for the same month was 1.89 US cents lower at US$1.6819.

The refineries on strike can produce 1.82 million barrels of fuel a day, data compiled by Bloomberg show. They span the US, from Tesoro Corp's plants in Martinez, California; Carson, California; and Anacortes, Washington, to Marathon Petroleum Corp's Catlettsburg complex in Kentucky to three sites in Texas, according to the USW's statement.

In Texas, Shell's Deer Park complex, Marathon's Galveston Bay plant and LyondellBasell Industries NV's Houston facility are affected, according to the union. LyondellBasell activated its work continuation plan, according to spokesman George Smalley on Sunday.

Tesoro will shut down remaining process units at its Martinez, California, refinery in the next 24 hours, Destin Singleton, a company spokeswoman, said. The 166,000 barrel-a-day refinery already had about half its processing capacity offline for planned maintenance, according to Ms Singleton.

More refineries are standing by to join the sites on strike, according to two people familiar with the plan who asked not to be identified because the information isn't public.

Shell remained "committed to resolving our differences with USW at the negotiating table and hope to resume negotiations as early as possible", Ray Fisher, a spokesman for The Hague, Netherlands-based company, said on Saturday.

The USW asked employers for "substantial" pay increases, stronger rules to prevent fatigue and measures to keep union workers rather than contract employees on the job, Gary Beevers, the USW international vice-president who manages the union's oil sector, said in Pittsburgh in October.

Brandon Daniels, a spokesman for Marathon, confirmed work stoppages at its Catlettsburg refinery and Galveston Bay plant. The walkout also includes the company's Houston Green cogeneration plant in Texas and Shell's Deer Park chemical plant.

Tesoro received a strike notification from its Mandan, North Dakota, refinery, in addition to plants in Martinez, California, Carson, California and Anacortes, Washington, said Ms Singleton on Sunday.

A notice allows workers to prepare for a walkout and doesn't necessarily mean a strike will occur, according to the union. The remaining USW-represented sites are operating under rolling, 24-hour contract extensions, the USW said. BLOOMBERG