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Big West Bakersfield Coking Refinery – Close/Sale?

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    <Update Big West Bakersfield Coking Refinery – Closure/Sale Rumor passed forward to me by industry contact – CRandall comments>
     
    BIG WEST OIL REFINERY TO CLOSE IN BAKERSFIELD, CALIFORNIA – 290 JOBS TO BE LOST 

    Last Updated Saturday, Apr 25 2009 12:00 PM


    Casey Christie / The Californian
    The sun sets behind the Big West refinery on Rosedale Highway.

    Randy Johnston struggles daily with uncertainty since he was laid off in February from his job as an outside operator at Big West refinery on Rosedale Highway.
    He gets up and scans job listings in newspapers and the Internet, but so far has found nothing that calls for his qualifications.
    I think that a big a majority of us (laid-off Big West workers) are waiting and praying that a buy for the refinery will happen soon, Johnston wrote in an e-mail last week.
    Its anybodys guess how much longer he and up to 178 others recently laid off at Big West must wait. It might never reopen as a refinery, though thats also unclear because little has been resolved in the three months since refining operations halted at Big West.
    The plants parent company is going through a complex Delaware bankruptcy case. And until there is significant progress, local oil producers likely will not be paid for deliveries made shortly before the Utah company, Flying J Inc., filed Chapter 11 in late December.
    Meanwhile, the state attorney generals office continues its investigation into whether a major oil company illegally contributed to the plants closure.
    Some things have changed in the aftermath of Big Wests shutdown. But they do not necessarily point to resolution.
    Fuel supply and demand
    Other California refineries have taken up the slack by producing more gasoline and diesel, helping to minimize the impact of prices paid by local motorists. There remains a question, however, as to whether the states refineries can keep pace once the economy picks up again.
    Also, some potential buyers have expressed interest in possibly buying the refinery, even as there are suggestions that the property could ultimately serve as a fuel terminal instead of a refinery.
    For its part, Flying J regrets the situation. Company spokeswoman Virginia Parker said in an e-mail last week that the company regret(s) any adverse impact the wind-down has had on the workers affected and on the greater Bakersfield community.
    We are considering all options that could put people back to work at the refinery, including a sale of the facility, her e-mail said. We are actively pursuing such a sale and have retained professional firms to help us do so as quickly and efficiently as possible.
    Sale on the way?
    One company looking at possibly making a bid is Connecticuts NTR Partners LLC. President Mario Rodriguez said Big West is among several refineries it has eyed, but that Flying Js bankruptcy means things are moving more slowly than NTR would like.
    (A)t this point it is unclear what the plans of management and the court (are), he said. And as long as we stay close to the situation, well figure out whether this is something that makes sense or not.
    Tom Kloza, chief oil analyst for the New Jersey-based Oil Price Information Service, suspects such a purchase does not, in fact, make sense in light of lower demand for fuel.
    Theres a lot of extra (refining) capacity thats not being used at the moment, he said.
    When it was running at full capacity, Big West supplied 2 percent of the states gasoline and 6 percent of its diesel.
    Now that its idle except for basic maintenance and safety operations, other refineries have been able to bridge the gap, said Susanne Garfield, spokeswoman for the state Energy Commission.
    But Judy Dugan, research director of Santa Monicas Consumer Watchdog, said that could change.
    When the economy recovers … demand is going to go up, especially for diesel, she said.
    A terminal instead?
    In the meantime, former plant owner Shell Oil Co. is making tentative plans to turn the plant into a fuel terminal, a use Dugan fears would employ fewer workers and pay them a lower wage than would a refinery. Kloza, on the other hand, called the terminal option more practical and potentially helpful, as it would aid distribution of fuel piped in from the Fresno area.
    When Shell sold the refinery in 2005, it retained ownership of a terminal and storage tanks on the property. It offered to lease them to Flying J, but the property was never subdivided, and so no lease was put into effect.
    Shell spokeswoman Alison Chassin confirmed that the company wants to use the terminal to supply the Bakersfield area with fuel. But she added that the company would be open to leasing the property to any buyer that wants to operate the plant as a refinery.
    Continuing investigation
    Another unsettled issue is the state attorney generals investigation into allegations that Shell contributed to Big Wests closure by illegally refusing to sell crude oil … or shutting off pipeline access to the plant.
    Shell has denied the charges, saying it tried to work out a deal in which Flying J would pay for shipments going forward.
    Big Wests inability to secure a steady supply of crude oil from Shell and other companies was the main reason for the refinerys closure.
    Dana Simas, a spokeswoman for the attorney general, said last week that the office is now monitoring the refinery sale process as part of the investigation.
    Uncertainty weighs heavily on the local oil producers and others who used to sell to Big West.
    Some of them are owed seven figures, said attorney John W. Kim, who represents a number of creditors in Flying Js bankruptcy case.
    When they will be paid and how much money they will ultimately recover is hard to say, said Kim, who works for the Los Angeles law firm of Nossaman LLP.
    It really is unclear, he said. There are just too many moving parts to say.

     

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