New York (Platts)--2Feb2009

US refiners and petrochemical manufacturers are "optimistic" about
reaching a new contract deal with the United Steelworkers union, a spokesman
for the refiners said Monday.

"We're optimistic we'll reach an agreement at some point," said Stan
Mays, a spokesman for Shell, the lead negotiator for the refiners and petchem
producers.

Talks between the two sides were to continue Monday morning after meeting
Sunday night, according to Mays and USW spokeswoman Lynne Baker. Earlier
Monday, Baker described the ongoing talks as "encouraging" (story 1358 GMT).

Rolling 24-hour extensions of the current three-year contract, which was
scheduled to expire at 12:01 a.m. Sunday morning, have continued, Baker said.
Refineries potentially affected by any labor walkout represent close to
64% of total US refining throughput, according to Baker.

The US Energy Information Administration, in its most recent report on US
refining capacity, put crude distillation capacity in the country at
17,593,847 b/d at the beginning of 2008.

About 24,000 refinery workers are covered under the latest contract.
The threat of a strike by workers has raised fears of idled refineries
and shortages of refined products such as gasoline.

Valero Energy, the largest refiner in the US, said Friday it would be
forced to idle its refineries in Memphis, Tennessee, and Delaware City,
Delaware, if the union called a strike.
But Shell has said its seven plants that would be affected by a strike
would keep producing because the company would implement a contingency plan
that has been in the works for the past year.
--Richard Rubin, richard_rubin@platts.com