UPDATE 6-Three dead in Tesoro Anacortes refinery fire

SEATTLE, April 2 (Reuters) - Three Tesoro Corp employees were killed and four critically injured in an early morning blaze at the oil company's 120,000 barrel-per-day refinery in Anacortes, Washington on Friday.

The fire started in the highly flammable naphtha unit, which was undergoing maintenance, at 12:30 a.m. PST (0730 GMT) and was contained by 2 a.m.

The blaze shut the plant's hydroprocessing units, the company's chief financial officer said, adding that other units could be shut after a daylight damage assessment.

The refinery's crude distillation unit is still running, but the company could not say what percentage of production was cut by the fire.

Tesoro expects to make up any lost production by purchasing from West Coast inventories or boosting production at its two California refineries, the CFO said.

The U.S. Energy Information Administration said this week there were 32.5 million barrels of gasoline in inventory on the West Coast, well above what's need to supply the region.

Four workers, two women and two men, were airlifted to Seattle's Harborview Medical Center, about 70 miles (113 km) south of the refinery. All are in critical condition from burns, a hospital spokeswoman said.

The fire was in a part of the plant processing naphtha, a liquid that boosts gasoline octane to make premium grades of gasoline required by some higher performance cars.

Naphtha hydrotreating removes the sulfur content from naphtha, which is then sent to a reformer where it is made into a higher-octane feedstock called reformate for gasoline.

The U.S. Chemical Safety Board said it was sending a team of investigators to probe the fire. 'It's a major case,' said CSB spokesman Daniel Horowitz.

The Tesoro Anacortes refinery fire is the deadliest accident involving production at a U.S. refinery since the BP Texas City explosion on March 23, 2005 in which 15 workers were killed and 180 others injured.

Four contract workers at the LyondellBasell refinery in Houston were killed when a crane collapsed in July 2008, and two workers were killed in fire on a tank under construction in March of this year at Holly Corp's Artesia, New Mexico, refinery.

The CSB is already investigating an October fire at Tesoro's Salt Lake City refinery.

The Anacortes fire could mean expensive legal trouble for Tesoro.

'I can confidently predict there are lawyers already on-site or in contact with unions representing Tesoro employees and signing up claimants as we speak,' said Lester Brickman, a professor at the Benjamin N. Cardozo School of Law in New York, and an expert in mass tort litigation. 'The ultimate liability depends on the number of people who had sufficient proximity to the fire to have viable claims.'

'Realistically, at this point, there is little Tesoro can do to minimize liability,' said Brickman. 'Naphtha is a very volatile substance, and if Tesoro were found to have been significantly negligent, that could magnify its liability.'

(Reporting by Janet McGurty and Bill Rigby; Additional reporting by Sweta Singh in Bangalore, Erwin Seba in Houston and Jonathan Stempel in New York; Editing by John Picinich) Keywords: TESORO/ANACORTES FIRE ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.