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Exxon, Valero Receive Union Strike Notices for Refineries

Exxon Mobil Corp. (XOM) and Valero Energy Corp. (VLO) received notices from the United Steelworkers union of its intent to strike at refineries in Montana and Texas if a national labor contract expires tonight without an agreement.

The 24-hour notices were for Exxon’s Billings, Montana, plant and Valero’s Port Arthur, Texas, refinery, according to the companies.

USW negotiators and Royal Dutch Shell Plc (RDSA), bargaining in Austin, Texas, on behalf of the companies, have failed to reach agreement on a new three-year contract after 14 days of talks. The national contract expires at midnight Houston time.

Valero will continue to operate its Port Arthur refinery in the event of a work stoppage, while closing its Memphis refinery, Chief Executive Officer Bill Kleese said today on a conference call with analysts and investors. He confirmed the Port Arthur notice today at the same time.

Rachel Moore, an Exxon spokeswoman in Fairfax, Virginia, confirmed the strike notice for Billings in an e-mail. Exxon’s labor agreements with the USW also expire tonight at its refineries in Beaumont, Texas; Torrance, California; and Chalmette, Louisiana.

Deadline Nears

As the deadline nears for contracts covering 30,000 workers at 69 refineries, companies are deciding whether to shut refineries or operate them with nonunion workers if the union should declare a general strike. During negotiations three years ago, both sides agreed to three, 24-hour rolling extensions of the contract before a deal was finally worked out.

LyondellBasell NV (LYB) will continue to run its Houston refinery if there’s a strike, David Harpole, a spokesman for the company in Houston, said in an e-mail.

“We remain optimistic that a mutually satisfactory agreement can be reached,” he said. “Trained personnel will be in place at the refinery and ready to assume operations if necessary.”

BP Plc (BP/) said in a statement that it would cut output at its Whiting, Indiana, plant to “a level that maintains safe winter operations.” The company said it wouldn’t hire replacement workers because “that would disrupt the progress BP has made with the USW in continuing to improve safety and operational performance.”

The USW is seeking higher wages, stronger protections for health and safety and a safety officer assigned to each facility. Shell has offered wage increases, changes to contract language related to health and safety practices, while not agreeing to have a safety process person at each plant, union sources familiar with the negotiations have said.

To contact the reporter on this story: Barbara J. Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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