New York (Platts)--9Nov2009/1135 pm EST/435 GMT

Western Refining plans to fully shut its 17,0000 b/d refinery in Bloomfield, New Mexico, by mid-December, a company spokesman said Monday.

Western officials earlier Monday said the company would immediately begin to shut the refinery due to "weak industry dynamics."

The move would allow Western to consolidate its operations in the Four Corners region of New Mexico into its 23,000 b/d refinery in Gallup, the company said in a third quarter earnings release.

In a telephone interview later Monday, Western spokesman Gary Hanson said the plants should average a combined 23,000-25,000 b/d in the fourth quarter. That compares to combined crude runs of about 25,000 b/d in the third quarter. Each plant was running at around 12,000-13,000 b/d, he said.

Bloomfield's closure will result in a pre-tax charge of $55-$65 million on Western's fourth quarter earnings, it said. Idling the facility will eliminate about $25 million in operating costs annually beginning in the first quarter of 2010, it added.

Western announced Bloomfield's closure in a press release on its third quarter earnings.

The refiner/marketer said the decision to shut Bloomfield came after a "thorough evaluation" of its Four Corners assets. Despite the move, Western said it will maintain "the capability to process the same volumes of crude that have been recently processed at both Bloomfield and Gallup combined."

Western said it is evaluating alternative uses for the Bloomfield facility, including the possibility of biofuels production.

"Western will continue to operate the Bloomfield products terminal and will supply the Four Corners with refined products by utilizing new pipeline connection and exchange supply agreements," it said. "The company will also maintain its marketing assets, and through the long-term exchange agreement, will supply barrels to Bloomfield in exchange for barrels produced at the El Paso refinery." Western also owns a 128,000 b/d refinery in El Paso, Texas, and a 70,000 b/d plant in Yorktown, Virginia.

Western CEO Paul Foster suggested layoffs are likely with the Bloomfield closure, but gave no details.

"The decision to idle the Bloomfield refinery was a difficult, but necessary decision to ensure that Western remains well positioned for the future, despite the weak industry dynamics," he said. "Western appreciates the dedication of our employees and is committed to treating them fairly and with respect as we work through this transition."

Western reported a third quarter loss of $0.05/share ($4.8 million), down from net income of $1.60/share ($109.2 million) in the year-ago period, on weak refining margins.

--Kevin Saville, kevin_saville@platts.com

--Beth Evans, beth_evans@platts.com