Striking Oil Workers, Shell Said to Reach Tentative Deal
The United Steelworkers union representing 30,000 U.S. oil workers has reached a tentative deal on a new four-year contract offered by Royal Dutch Shell Plc on behalf of oil companies, a person familiar with the talks said.
The potential deal contains language addressing the union’s concern about worker fatigue and contractors performing routine maintenance at oil refineries, said the person, who asked not to be identified because the information isn’t public. It would be the first time that the national agreement was set for four years instead of the traditional three, the person said.
An accord could end a strike at U.S. plants that began on Feb. 1 and has since spread to sites that account for almost 20% of the country’s total refining capacity. It’s the first national walkout of U.S. oil workers since 1980, when a work stoppage lasted three months. The USW represents workers at plants that together account for 64% of U.S. fuel output.
Curtis Smith, a spokesman for The Hague, Netherlands-based Shell, said by e-mail from Washington that “negotiations are ongoing.” Lynne Hancock, a spokeswoman for the USW, didn’t immediately respond to telephone and e-mailed requests for comment.
The tentative deal comes after the USW, which has workers at more than 200 refineries, fuel terminals, pipelines and chemical plants across the U.S., rejected seven previous offers from Shell, which has been negotiating on behalf of employers including Exxon Mobil Corp. and Chevron Corp.
Gasoline futures for April delivery sank 0.9% on March 12 to settle at $1.8095 a gallon on the New York Mercantile Exchange.
The United Steelworkers union has been fighting to limit the number of contractors performing work at plants. Daily maintenance “is the work of the USW,” Leo Gerard, the group’s international president, said in a statement on Feb. 25. Shell had said the USW’s “unreasonable” demands would take away hiring flexibility.
About 6,550 people were on strike as of March 12 based on USW estimates. The walkout began on Feb. 1 with: Tesoro Corp.’s plants in Martinez and Carson, California, and Anacortes, Washington; Marathon Petroleum Corp.’s Catlettsburg complex in Kentucky and Galveston Bay site in Texas; Shell’s Deer Park complex in Texas and LyondellBasell Industries NV’s Houston plant.
Workers at BP Plc’s Whiting, Indiana, and Toledo, Ohio, refineries joined the work stoppage a week later. And late on Feb. 20, the USW expanded it to include Motiva Enterprises’s Port Arthur, Texas, refinery, the nation’s largest, as well as its refineries in Convent and Norco, Louisiana. Motiva is a joint venture between Shell and Saudi Arabian Oil Co.
United Steelworkers members operate refinery units, perform maintenance and work in labs at the plants. The work stoppage also covers a Marathon cogeneration plant in Texas and two Shell chemical plants in Texas and Louisiana.
The USW and Shell began negotiations on Jan. 21 amid the biggest collapse in oil prices since 2008, driven largely by surging output from U.S. shale formations that cut oil prices by 49% in the second half of 2014.
Refiners in the Standard & Poor’s 500 have tripled since the beginning of 2012, when the steelworkers last negotiated an agreement. Marathon and Tesoro went on that year to take their place among the 10 best performers in the S&P 500 Index.
A national agreement, which addresses wages, benefits and health and safety, would serve as the pattern that companies use to negotiate local contracts. Individual USW units may still decide to strike if the terms they’re offered locally don’t mirror those in the national agreement.
