* Coast Guard says will re-open channel 'as soon as we can'
* More than 80 inbound and outbound vessels waiting to move (Updates Houston Ship Channel remains shut by nightfall)
By Erwin Seba
TEXAS CITY, Texas March 24 (Reuters) - The closure of the vital Houston Ship Channel looked set to extend to a fourth day after the Coast Guard struggled to finish cleaning up after an oil barge spill on Monday, threatening to force deeper production cuts at local refiners.
Earlier on Monday, the Coast Guard had told ship operators that it should be able to reopen the waterway later in the day, resuming at least some supply of crude oil to more than one-tenth of the nation's refining capacity.
"We will begin the process of a tapered ... not a floodgate resumption of marine traffic," Captain Brian Penoyer, commander of U.S. Coast Guard sector Houston-Galveston and captain of the Port of Houston, told reporters on Monday.
"We anticipate re-opening the Houston Ship Channel as soon as we can," he said.
However the Port of Houston was still shut by evening, officials said, with the queue of waiting vessels growing to more than 90.
Penoyer explained that traffic can't move again until there's no more oil in the water to cling to ships and be carried further. Also, any ships that were touched must be cleaned before moving through water deemed sufficiently clean.
The closure of the channel on Saturday has led to a queue of more than 90 vessels trying to move into or out of the Gulf of Mexico. Shipping delays forced Exxon Mobil Corp to cut production at the nation's second-largest refinery.
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.
INVENTORIES CONSIDERED AMPLE
Analysts on Monday were largely unconcerned, noting that ample inventories in the region provide a cushion for refiners.
But a senior engineer at a Houston-area refinery that depends on crude deliveries through the ship channel was concerned about the requirement that the water be cleaned of any thick fuel oil before ships run back and forth to ensure they don't track it further upstream or into the Gulf.
"We're toast," the engineer said. "I would say this is a big problem. Any delay is bad, but three days or more is really bad because we use the channel to bring crude and products in and out."
The 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.