(Updates with Coast Guard eyeing partial reopening Monday)
HOUSTON, March 24 (Reuters) - Exxon Mobil Corp cut production at its largest refinery on Monday as the U.S. Coast Guard was preparing for a possible re-opening of the Houston Ship Channel by late afternoon to return the supply of crude oil for more than one-tenth of the nation's refining capacity.
Exxon said production at its 560,500 barrel per day Baytown, Texas, refinery had been cut on Monday due to the closure of the Houston Ship Channel. The company expects further production cuts by mid-week, if the channel remains shut. The Baytown refinery is the second largest in the United States.
The Houston Ship Channel was shut on Saturday after a collision between a Kirby Inland Marine oil barge and a cargo ship, spilling some 4,000 barrels, or 168,000 gallons (636,000 liters), of residual fuel oil. The channel allows oil barges and cargo ships to sail from the Gulf Coast to refiners and terminals further inland.
By noon CDT (1800 GMT) Monday, a Coast Guard plane had flown over the channels to Houston and Texas City, Galveston and the Intracoastal Waterway where they were shut near the entrance to Galveston Bay.
The overflight is the second of the day to determine if the oil has moved out of the waterway.
"We're trying to determine when we can get to a partial re-opening of the channel," said Coast Guard Petty Officer Matthew Schofield, a spokesman for the maritime safety service, which is overseeing the cleanup.
A total of 43 ships were waiting to leave the port of Houston and 38 ships were waiting to come in, up from 40 outbound and 35 inbound on Sunday evening.
A warning to mariners issued by the Coast Guard on Sunday said portions of the Houston channel and its offshoots to Texas City and Galveston, Texas, along with a portion of the Gulf Intracoastal Waterway, could be closed through March 29 or longer, depending on the requirements of a cleanup.
Five ships waited to come into the ports of Texas City and Galveston, Texas, and 12 ships waited to leave the ports, the Coast Guard said.
Kirby Inland Marine is operated by Kirby Corp.
Cleanup crews have pumped all of the remaining fuel oil from the barge, which has been refloated and moved to a different position near the site of the collision in the channel.
Marathon Petroleum Corp. declined on Monday to discuss operations at its 451,000-bpd Galveston Bay Refinery and 80,000-bpd Texas City refinery.
Fewer than 10 oil-covered birds have been recovered for cleaning, according Texas wildlife agencies. (Reporting by Erwin Seba in Houston, Selam Gebrekidan in New York; Editing by Jeffrey Benkoe, Stephen Powell and Bernard Orr)
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