Western Refining selling Yorktown refinery
Sale is expected to close by year’s end
By Amanda Kerr, firstname.lastname@example.org | (757) 345-2345
4:43 p.m. EST, December 1, 2011
Yorktown Refinery (Joe Fudge, Daily Press / March 23, 2007)
YORK Western Refining, parent company of the Yorktown Refinery, announced Thursday that it has entered into an agreement with a Texas-based company for the sale of the Yorktown refinery.
The $220 million sale to Plains Marketing and Plains Pipeline, subsidiaries of Plains All American Pipeline based in Houston, Texas, will include both the terminal and idle refinery at Yorktown as well as an 82-mile segment of a 424-mile crude oil pipeline Western owns in New Mexico. The sale is expected to close before the end of the year.
Western, based in El Paso, Texas, purchased the Yorktown Refinery in 2007 when it merged with Giant Industries. BP sold the refinery to Giant in 2002. The refinery was built in 1956 by Amoco.
Last year Western ceased refining operations at Yorktown and laid off around 230 employees. Operation of a terminal at the refinery, which included a storage facility, pipeline access, docks for barges and a loading area for trucks, was continued. The plan had been to use the terminal for transport of products from other suppliers, but as of last summer the terminal was only transporting Western’s products.
This summer Western connected the terminal to the Colonial Pipeline, which runs from Texas to New Jersey, to directly pipe oil products from the Gulf Coast. The connection to the Colonial Pipeline could have been an attractive addition for buyers considering purchasing the Yorktown terminal.
Gary Hanson, spokesman for Western, said he couldn’t speculate on whether the Colonial Pipeline connection was beneficial in attracting a buyer, but that the connection was an improvement in terms of Western’s operation of the terminal.
The decision to sell the Yorktown facility was largely a financial one for Western. Hanson said one of Western’s primary goals has been to reduce its debt. Third quarter results released by Western stated the company had a net debt of $659.8 million.
Plains All American, in a press release, stated that it planned to “enhance connectivity and performance” of the terminal with modifications to the facility. The terminal will have multiple transportation alternatives and store crude oil, refined products, propane, butane, ethanol and other bio-diesel fuels.
It doesn’t seem likely that the refinery will be reopened. Harry Pefanis, president of Plains All American, explained in a conference call to investors Thursday that the company plans to disassemble and sell the idle refinery equipment. Plains All American will share 50% of any proceeds from the sale of equipment with Western.
There are currently 30 employees working at the terminal and the refinery, where some are in the last stages of shutting down and cleaning equipment. Hanson said he was unsure whether there might be any immediate impact to employees at the terminal in terms of job elimination. Executives with Plains All American did not return calls for additional comment.