Lyondell cuts Houston refinery output after fire

By Erwin Seba

HOUSTON, April 8 (Reuters) -- A fire erupted at LyondellBasell Industries' 263,776-bpd Houston refinery on Friday, forcing the company to cut output as much as 25% as it will take up to a month to fix a damaged coker, sources familiar with operations told Reuters.

No injuries were reported, the Houston Fire Department said by telephone. As black smoke blanketed swaths of Houston, emergency officials urged nearby residents not to leave their homes and to turn off air conditioners to avoid inhaling the fumes in the fourth-largest US city.

Television images later showed the fire having been largely extinguished.

Lyondell alerted a community hotline that the fire occurred, then later issued a statement confirming the blaze was in a coker.

Sources at the plant who are not authorized to speak publicly described the fire as "very bad" at the 42,000-bpd delayed coker unit.

On Thursday, a hydrogen compressor malfunction shut a gasoil hydrotreater at the plant. It was not clear if the events were related.

Friday's fire was the second in less than 24 hours at a major Houston-area plant. On Thursday afternoon a fire broke out at ExxonMobil's 560,500-bpd plant in Baytown, the nation's second-largest refinery. That fire caused no injuries and was extinguished within an hour.

About half of all US refining capacity is in plants in Houston and along the US Gulf Coast.

The US gasoline crack spread, a widely-used benchmark for refiner margins, extended gains Friday, rising by 2.35% to $21.79/bbl in the minutes after the Reuters report of the fire at the Houston refinery. The crack spread is up roughly 5% on the day.

Canadian heavy crude differentials fell on Friday, with May trading at $15.05/bbl below WTI, according to Shorcan Energy brokers, down 30 cents from Thursday's settlement. June differentials fell by 85 cents to a $14.65/bbl discount to WTI.

Lyondell has run more Canadian crude at the plant over the last three years while reducing Venezuelan heavy oil imports.

Gulf Coast cash refined products markets largely shrugged off the fire. A2 CBOB gasoline differentials rose less than a penny per gallon, then retreated to Thursday's levels, while ultra-low sulfur diesel climbed 0.75 cent/gal and stalled, traders and brokers said.