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Lawmakers worry about East Coast refining capacity

By Janet McGurty

NEW YORK (Reuters) - With the East Coast poised to lose 50 percent of its oil refining capacity, three members of Congress on Monday worried that while the country is producing more of its own crude oil, it might grow more dependent on other countries for gasoline and diesel fuel.

Pennsylvania Congressman Pat Meehan hosted a panel of energy experts for a field meeting in Aston, Pennsylvania, of the Committee on Homeland Security.

Meehan and two other legislators, Congressmen John Carney from neighboring Delaware and Mike Fitzpatrick from Bucks County, Pennsylvania, peppered the experts with questions about fuel prices and logistics as well as national security.

Two refineries in the Philadelphia area have closed in recent years, and a third is scheduled to close this summer.

Brandon Wales, Director of Homeland Infrastructure Threat and Risk Analysis Center (HITRAC), a unit of Homeland Security that analyzes the national threat to critical infrastructure, said his department found no reason to be concerned by the closures on a national security level.

He said there could be shortage of some products in the region, like diesel or jet fuel, but that his program HITRAC does not look at supplies of specific products.

Wales said this year there is an ongoing $10 million study into the vulnerability on pipelines such as the Colonial Pipeline, the nation's largest product pipeline.

Colonial, which can carry 500,000 bpd of product from the nation's refining hub along the U.S. Gulf Coast to the New York Harbor, has been full up for several years.

Its planned expansions will come on line but there is likely to be a gap between refinery closures and when expansions come on line. This gap could cause price spikes and product shortages.

HITRACS also is working with the Plantation Pipeline, a 600,000 bpd pipeline starting in Louisiana that supplies southeastern U.S. markets up to Washington D.C., Wales said.

The legislators expressed concern that the country is swapping one kind of petroleum dependence for another with increased imports of refined products like gasoline could playing the political role that high imports of crude had played in the past.

They also expressed concern that the U.S. could be on the receiving end of sanctions like those imposed on Iran, where purchase of its oil and exports of gasoline to refining-poor countries is banned as it continues to develop nuclear capability.

Wales said his study did not account for factors like the possibility of outside supply disruptions.

Howard Gruenspecht, acting head of the Energy Information Administration, spoke about the published findings of the Department of Energy's statistical arm. A second panel was comprised of two industry representatives -- Charles Drevna of the American Fuel and Petrochemicals and Robert Greco, of the American Petroleum Institute who discussed crude and product markets.

In 2011, Sunoco shuttered its 178,000 bpd refinery in Marcus Hook, Pennsylvania after it said it received no bids. The refinery, which began operation in 1902, is being evaluated by a regional board as to what the best use will be.

Sunoco has said it will close down its 335,000 bpd Philadelphia refinery, the nation's longest continuously running plant, by July 1 if there are no buyers.

ConocoTrainer also idled its 185,000 bpd refinery in nearby Trainer, Pennsylvania in late September. The company says it continues to seek a buyer.

All three refineries are in a 12-mile radius.

(Reporting By Janet McGurty; Editing by David Gregorio)

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