Philadelphia Energy Solutions, the East Coast’s largest refinery, will close within the next month, an announcement that comes days after a series of explosions rocked the city and reverberated throughout the country.
Here’s a look back at the events that lead up the fire, which the refinery’s CEO said Wednesday “made it impossible” to “continue operations.”
The formation: The South Philly complex, which is technically two different refineries, dates back more than a century. Sunoco acquires both refineries, and transferred the complex in 2012 to a joint venture between Sunoco and the Carlyle Group. The joint venture is named Philadelphia Energy Solutions.
January 22, 2018
Bankruptcy: Philadelphia Energy Solutions LLC files a bankruptcy plan in an effort to restructure $525 million of debt and bring in new owners, pointing the finger toward the rising cost of renewable energy credits for its financial distress.
Repost from The Financial Post, Toronto [NOTE: THIS POSTING OUT OF DATE, BUT THE ISSUES REMAIN SIGNIFICANT FOR US ALL! …FROM JUNE, 2013]
[Editor’s note: Here in Benicia, Valero is repeatedly using a scare tactic as one of its primary talking points. When Valero says that their Crude By Rail project will “ensure the refinery remains a strong and healthy member of the community” (quoting from Valero’s mailer), it plainly IMPLIES that without this project, Valero may NOT remain strong and healthy, nor a member of the community. Valero has in this way frightened their own employees about their job security, and they hope to scare the rest of Benicia about the possibility of a sell-off or closure, harming the local tax base and economy.
A few fearful and disorderly refinery employees and/or supporters have made verbal threats and ruined SafeBenicia signs, but opponents of the project don’t scare that easily. A transition away from fossil fuels will be fought with money, fear and every form of propaganda. Don’t listen. Solidarity with the workers is fine, but don’t buy into the threats that feed their fear and fury.
The following article on “Atlantic Basin” refineries details 15 closures, 1 sale and 5 “saved” refineries over the last 5 years. Four of the closures were U.S. refineries, one in Canada. These closures and retrofits will be a growing phenomenon as we transition out of fossil fuels as a primary energy source. It will be tough on us all, but good for life on Earth. – RS]
Shut down, saved or sold: The Atlantic Basin refineries
Selam Gebrekidan, Reuters | June 21, 2013
Imperial Oil Ltd said earlier this week it was unable to find a buyer for its refinery in Dartmouth, Nova Scotia, and will instead convert the facility into a terminal operation.
The refinery, which employs some 400 staff and contractors, is Imperial’s least-profitable operation, as it uses high-priced imported crude oil. The company’s other three refineries process cheaper Canadian crude.
Imperial, controlled by Exxon Mobil Corp, put the refinery up for sale more than a year ago and has had interested parties but was not able to make a deal.
The refinery, the only one in Nova Scotia, is among several on both sides of the Atlantic that operators have put up for sale, shut down, or threatened to close due to poor economics.
Below is a list of these refineries.
DARTMOUTH, NOVA SCOTIA, CANADA Owner: Imperial Oil Ltd Capacity: 88,000 BPD
Imperial said in June 2013 it was unable to find a buyer for its Dartmouth, Nova Scotia, refinery after putting it up on sale more than a year ago, and will instead convert the facility into a terminal operation. The refinery is Imperial’s least-profitable operation as it uses high-priced imported crude oil. Imperial is controlled by Exxon Mobil Corp.
PORT READING, NEW JERSEY, USA Owner: Hess Corp Capacity: 70,000 BPD
Hess shut down its Port Reading refinery at the end of February, 2013, the second such facility the company was forced to shutter over the last year, marking the company’s exit from the refining and terminal business.
ARUBA REFINERY, ARUBA Owner: Valero Energy Corp Capacity: 235,000 BPD
Valero decided to convert the refinery into a crude oil and refined products terminal in September 2012 after failing to find a buyer for the plant.
The refinery had been idled since March 2012 due to weak profit margins since it processes heavy sour crudes it bought at a higher cost. Chinese oil giant PetroChina was said to be among strong bidders for the refinery.
ST. CROIX, U.S. VIRGIN ISLANDS Owner: Hovensa LLC, a joint-venture between Hess Corp and state oil company Petroleos de Venezuela Capacity: 350,000 BPD
Hovensa first reduced rates from 500,000 bpd and then shut the refinery in February 2012. The government of the U.S. Virgin Island objected to the shutdown and in April 2013 said it had agreed to a 14-month sales process with Hovensa LLC, during which time the company could use the plant as a terminal.
The refinery had been powered by fuel oil rather than cheap natural gas because its isolation in the Caribbean mean gas imports are not available. That fact contributed to Hovensa making a loss of $1.3 billion in the last three years of its operation and any future owner will have the same problem to contend with.
MARCUS HOOK, PENNSYLVANIA, USA Owner: Sunoco Inc, part of Energy Transfer Partners LP, Sunoco Logistics Partners LP, which is part owned by Energy Transfer Partners. Capacity: 178,000 BPD
Sunoco shut the refinery in Marcus Hook, Pennsylvania, in December 2011, due to excess capacity and poor margins. Sunoco Logistics then bought the refinery in April 2013 for $60 million and plans to turn it into a natural gas liquids hubs to take advantage of the nearby Marcellus and Utica shale plays.
The company received no offers for the plant as a refinery. Sunoco is processing natural gas at the plant.
YORKTOWN, VIRGINIA, USA Owner: Western Refining Capacity: 66,300 BPD
Western Refining shut the refinery in September 2010 because of poor refining margins. The site was subsequently sold to Plains All American in December 2011 and is currently in use as a terminal.
EAGLE POINT, NEW JERSEY Owner: Sunoco Inc, part of Energy Transfer Partners LP. Capacity:145,000 BPD
Sunoco shut the Eagle Point refinery in November 2009, the first of the casualties of weak demand and slim profit margins among Atlantic Basin refineries. The site, which is connected under the Delaware River to Sunoco’s other sites, Philadelphia and Marcus Hook (see above), is a terminal with capacity to receive barges of Bakken crude from Albany.
BERRE, FRANCE Owner: LyondellBasell Capacity: 105,000 BPD
In January 2012, LyondellBasell mothballed the refinery in southeastern France having been unable to find a buyer for the plant since it began a sales process in May 2011.
Anne-Christine Poujoulat/AFP/Getty ImagesAn employee of US chemical group LyondellBasell waves a French flag as the employees gather during a new general meeting to protest against the closing of their plant in Berre l’Etang, southern France, on September 29, 2011.
CORYTON, ESSEX, UNITED KINGDOM Owner: Petroplus Capacity: 175,000 bpd
A joint-venture of UK Ltd, Vopak and Greenergy bought the refinery from Petroplus and converted it into a terminal in June, 2012. The refinery had stopped processing crude in May last year after its estimated $1 billion price tag failed to attract buyers.
Matthew Lloyd/BloombergThe Petroplus refinery in Coryton, Essex.
TEESSIDE, UNITED KINGDOM Owner: Petroplus Capacity: 117,000 bpd
Petroplus idled the plant in April 2009.
PETIT-COURONNE REFINERY, NORMANDY, FRANCE Owner: PetroPlus Capacity: 161,000 bpd
Petroplus announced in April 2013 that it will shut the refinery after bids to buy it were rejected as unfeasible by the plant’s administrator.
REICHSTETT, FRANCE Owner: Petroplus Capacity: 85,000 bpd
Petroplus closed the refinery in eastern France in the second quarter of 2011. The least profitable of the plants in the PetroPlus refinery stable, the refinery was converted to become a terminal.
DUNKIRK, FRANCE Owner: Total SA Capacity: 150,000 BPD
A French court authorized oil major Total to permanently close the refinery in late October 2010 and proceed with plans to develop non-refining activities on the site.
WILHELMSHAVEN, GERMANY Owner: ConocoPhillips
Capacity: 260,000 bpd
ConocoPhillips put the simple, hydroskimming refinery up for sale in July 2010. It was bought a year later by private Dutch company Hestya. It is currently being used as a terminal.
CREMONA, ITALY Owner: Tamoil Capacity: 90,000 bpd
Libya’s Tamoil shut the Italian refinery at the end of March 2011 and said it would pursue plans to convert the plant to a storage site.
REFINERIES FOR SALE:
MILFORD HAVEN, UNITED KINGDOM Owner: Murphy Oil Capacity: 130,000 BPD
U.S. oil firm Murphy Oil Corp said it would sell the plant to focus on oil and gas exploration and its U.S. retail business. In its first quarter earnings, announced in May 2013, the company said it continues to look for a buyer.
PHILADELPHIA, PENNSYLVANIA, USA Capacity: 330,000 BPD Current Owner: Philadelphia Energy Solutions Former Owner: Sunoco Inc. Philadelphia Energy Solutions is the largest refinery on the U.S. East Coast and is a joint venture of Carlyle Group LP and Energy Transfer Partners, which bought its former owner, Sunoco.
Sunoco and Carlyle reached a deal in the summer of 2012 to keep the plant running with Carlyle overseeing daily operations while Sunoco retained a minority stake in return for its refinery assets. JPMorgan Chase & Co’s commodities division would supply the refinery with crude and non-crude feedstocks and purchase fuel produced by the plant for offtake.
Regional legislators, refinery unions and industry operators lobbied against the plant’s shutdown arguing that fuel shortages in the East Coast after the plant’s potential shutdown could create fuel shortages and hurt U.S. national security.
Mike Mergen/Bloomberg NewsSunoco Inc.’s Philadelphia Refinery stands on the banks of the Schuykill River in Philadelphia, Pennsylvania.
TRAINER REFINERY, PENNSYLVANIA, USA Capacity: 185,000 BPD Current Owner: Monroe Energy LLC, a subsidiary of Delta Air Lines FormerOwner: ConocoPhillips, which later spun off its refining and downstream arm Phillips 66 Delta bought the refinery from Conoco Phillips in spring of 2012 in order to control its jet fuel costs, which had reached $12 billion in 2011. The refinery has not yet become profitable But Delta said it expects the plant to turn a profit of $75 million to $100 million in the second quarter. It expects to use 50,000 bpd of cheap shale oil from the Bakken formation in North Dakota by the end of 2013.
Delta has a contract with BP Plc for crude supplies and former owner Phillips 66 to sell or swap products other than the jet fuel that the airline needs.
Jeff Topping/Getty Images
CRESSIER REFINERY, SWITZERLAND Capacity: 68,000 BPD Current Owner: Varo Energy Holding, a joint venture between Vitol and Marcel Van Poecke, co-founder of PetroPlus, and founder of AtlasInvest. Former Owner: Petroplus Vitol, the world’s largest oil trader, formed the joint venture to buy the refinery in June 2012, six months after Swiss-based Petroplus filed for insolvency. The refinery was fully operational by July that year.
ANTWERP REFINERY, BELGIUM Capacity: 107,500 bpd Current Owner: Gunvor, Swiss-based trading house Seller: PetroPlus Swiss-based trading firm Gunvor, co-owned by Russian tycoon Gennady Timchenko, bought the refinery in March 2012 from insolvent Petroplus to expand its infrastructure footprint in Europe’s largest oil trading hub. The purchase also provides Gunvor with “bricks and mortar” assets, giving it a reason to hedge exposure to physical markets ahead of stringent regulations on derivatives trading.
Jock Fistick/BloombergStorage tanks are seen at the Antwerp oil refinery.
INGOLSTADT REFINERY, GERMANY Capacity: 100,000 bpd Current Owner: Gunvor Former Owner: PetroPlus Gunvor bought the refinery from insolvent Petroplus in May 2012 and began operating the plant that August. The refinery had been in stand-by mode for seven months before the deal.