Valero resets work on Memphis refinery's gasoline unit -sources

(Adds Valero no comment, details on work, units)

HOUSTON, Aug 20 (Reuters) - Valero Energy Corp has delayed planned work on the gasoline unit at its 180,000-barrel-per-day (bpd) Memphis, Tennessee, refinery this fall due to strong Midwest refining margins, sources familiar with plant operations said on Thursday.

Gasoline prices have shot up in the Midwest due to a production cut that began earlier this month at BP Plc's Whiting, Indiana, refinery because of an unplanned shutdown of that plant's largest crude unit. That also lowered crude oil prices, widening refiners' potential profits.

Valero planned earlier this year to install the flue gas cooler on the 65,000-bpd gasoline-producing fluidic catalytic cracking unit (FCCU) beginning in mid-October, the sources said.

The earliest it can begin now is late October, and the refinery is also weighing putting it off until early December or early 2016 as part of a planned overhaul that will include the smaller of two crude distillation units (CDU) and other units at the refinery.

Valero spokesman Steven Lee declined to discuss the company's plans for the Memphis refinery.

Valero has previously rescheduled the flue gas cooler's installation due to high refining margins. Valero had laid plans to install the large device in late June only to reschedule to mid-October.

The flue gas cooler is part of the FCCU's system for reducing pollution from the unit.

The cooler, which will be attached by a crane high on the side of the FCCU, improves the efficiency of the unit while reducing the temperature of the circulating catalyst. The catalyst is key to the production of gasoline.

The work scheduled for early 2016 centers around the Memphis refinery's 80,000-bpd CDU and the production units it supplies, the sources said. CDUs do the initial refining of crude oil coming into a refinery and provide feedstock for all other production units.

While the smaller unit is shut for the early 2016 overhaul, the 110,000-bpd CDU at the Memphis refinery is due to remain in production, according to the sources. (Reporting by Erwin Seba; Editing by Paul Simao and Jeffrey Benkoe)