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(Bloomberg) — Royal Dutch Shell Plc met with the United Steelworkers on Monday about a new, three-year labor contract for U.S. oil workers, less than two days after the union started the biggest refinery strike since 1980.
Shell, negotiating the contract on behalf of oil companies, and the United Steelworkers “resumed communications on Monday in hopes of coming to a mutually satisfactory contract agreement,” Ray Fisher, a spokesman for The Hague, Netherlands- based Shell said by e-mail. The USW, representing employees at more than 200 refineries, terminals, pipelines and chemical plants, said in a statement that the meeting was at Shell’s request and that “no progress was made.”
The plants on strike account for 10 percent of U.S. refinery capacity. One site has curbed production and a full walkout of USW workers would threaten to disrupt as much as 64 percent of U.S. fuel output. Union leaders haven’t called a strike nationally since 1980, when a stoppage lasted three months. Shell and union officials began negotiations on Jan. 21 amid the biggest collapse in oil prices since 2008.
“There’s no guarantee that if we can’t get back to bargaining we won’t increase the number of refineries” on strike, USW international president Leo Gerard said in a phone interview from Pittsburgh on Monday. All nine sites remain on strike, Lynne Hancock, a USW spokeswoman in Nashville, Tennessee, said by e-mail late Monday.

Offer Rejections

The union has rejected five offers made by Shell on behalf of companies including Exxon Mobil Corp. and Chevron Corp.
The USW has been asking employers for better health-care benefits and measures to prevent fatigue and keep union workers rather than contract employees on the job, Gerard said. The company has refused to discuss lowering the $7,500 that workers must pay annually before health insurance kicks in 100 percent, known as the out-of-pocket maximum, he said.
The refineries on strike can produce 1.82 million barrels of fuel a day, data compiled by Bloomberg show. They span the U.S., from Tesoro’s plants in Martinez and 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.
U.S. benchmark West Texas Intermediate oil rose 45 cents to $50.02 a barrel in electronic trading on the New York Mercantile Exchange at 10:21 a.m. Singapore time on Tuesday. Gasoline for March delivery added 0.9 percent to $1.5585 a gallon, and the diesel contract for the same month gained 0.7 percent to $1.7704.

Contingency Plans

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.
Lyondell, Marathon, Shell and Tesoro have contingency plans in place to keep refineries operating, according to company statements. The walkout also includes Marathon’s Houston Green cogeneration plant in Texas and Shell’s Deer Park chemical plant.
United Steelworkers members do everything from operating units to performing maintenance to testing and analyzing samples in labs at U.S. refineries, Hancock said by phone Monday.
Tesoro said on Monday that it was shutting process units at the Golden Eagle refinery near Martinez, California, since half of its processing capacity was already offline for maintenance. Its Anacortes and Carson refineries are operating, Tina Barbee, a spokeswoman at the company’s headquarters in San Antonio, said by e-mail.
Remaining USW-represented sites are operating under rolling, 24-hour contract extensions, according to the union.

–With assistance from Ben Sharples in Melbourne, Robert Tuttle in Calgary and Barbara Powell and Harry R. Weber in Houston.

To contact the reporters on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net; Jessica Summers in New York at jsummers24@bloomberg.net To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Aaron Clark