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COP Planning Sale Alliance Refinery

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This topic contains 1 reply, has 1 voice, and was last updated by  Charles Randall 9 years, 7 months ago.

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  • #2030

    basil parmesan
    Participant

    ConocoPhillips Said to Be Planning Sale of Alliance Refinery

    December 01, 2011, 5:28 AM EST
    By Bradley Olson and Jessica Resnick-Ault

    Nov. 30, 2011 (Bloomberg) — ConocoPhillips, the U.S. oil and gas company that plans to spin off its refining business next year, is seeking buyers for its Alliance refinery in Belle Chasse, Louisiana, according to two people familiar with the companys plans.

    The Gulf Coast plant, which can process up to 247,000 barrels a day, may fetch $700 million to $1 billion excluding inventory, Sam Margolin, a refining analyst for Global Hunter Securities LLC, said in a telephone interview today.

    ConocoPhillips plans to create a new company called Phillips 66 with the spinoff of its refining, chemicals and pipeline businesses in the first half of 2012. The Alliance sale would happen after the split, one of the people said. The two people declined to be quoted because they werent authorized to discuss the sale publicly.

    Phillips 66 is poised to become the largest U.S. independent refiner after the spinoff, even as it reduces its global refining capacity from 2.7 million barrels a day in 2009. An Alliance sale, together with the potential shutdown of its Trainer, Pennsylvania, plant and recent sale of a refinery in Wilhelmshaven, Germany, would shrink the new companys capacity by about 700,000 barrels a day.

    Phillips 66 will focus on growth opportunities in its chemicals and pipelines segments, as well as investing in high-return refining operations, according to a Nov. 2 ConocoPhillips presentation. ConocoPhillips and Cenovus Energy Inc. have spent $3.8 billion upgrading the jointly-owned Wood River, Illinois, refinery to process increasing volumes and varieties of crude produced in North America, including Canadas oil sands.

    PBF Possible BuyerRich Johnson, a spokesman for Houston-based ConocoPhillips, declined to comment on the potential sale, citing the companys policy of not responding to market rumors or speculation.

    A possible buyer for Alliance may be private equity-backed PBF Energy Partners LP, which has bought three refineries on the East Coast since 2010 and may seek exposure to other geographical areas, said Global Hunters Margolin, who does not rate ConocoPhillips or own its shares. PBF is backed by private- equity firms Blackstone Group LP and First Reserve Corp.

    The refinery may attract buyers eager to expand access to the U.S. Gulf Coast, where the ability to export diesel fuel to South America and other markets has boosted profits for companies that process crude, Phil Weiss, an analyst for Argus Research in New York, said in a telephone interview today. Weiss rates ConocoPhillips a buy and doesnt own shares.

    Alliance will be one of two large Gulf Coast refineries looking for a buyer, as BP PLC plans to sell its Texas City, Texas, plant.
    –With assistance from Edward Klump in Houston. Editors: Susan Warren, Charles Siler
    To contact the reporters on this story: Jessica Resnick-Ault in New York at jresnickault@bloomberg.net; Bradley Olson in Houston at bradleyolson@bloomberg.net
    To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

  • #4819

    Charles Randall
    Participant

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    Here is update on COP sales plans for Alliance Coking Refinery (along with COP Tx City refinery) which is seeking buyers – PBF Energy rumored to be among list.
    Putting Phillips 66 label on COP downstream assets and selling off 247MBD alliance, shutting down/selling Trainer Refinery 185MBD & recent sale Wilhelmshaven German Refinery 260MBD is loss 700MBD (~692MBD) according article. Place those numbers against hyped increase of 90MBD (Borger 25MBD & Woodriver 60MBD – mostly coker additions) for Phase I WRN Cenovus JV expansion …… is not positive increase.

    Nor does putting Phillips label (poor refining track record) make its remaining 2.7 MM BPD capacity the largest independent …… when it is still really a linked major integrated asset – stepchild as it may be becoming notwithstanding. (Only Consluting/Investor/Walstreet analyst…..or media would be stupid enough to swallow this viewpoint.)

    The Alliance Coking Refinery is unlikely sell at $700MM – $1 Billion value either since that would put it in range of $US2850/MBD to $US4050/MBD range that is approaching 35-50% of repalcement value that only merged coking refineries achieve. Most sales have been in the $800 – 2000/MBD range (10-25% replacement value). But I would have to admit this refinery would still be good buy – much like the MAP Robinson Coking unit the Alliance Coker is under utilized as sweet crude anode grade processor & has coking furnace capable to process a much heavier & more sour crude having been designed for Alaska North Slope crude.

    I think if Ecopetrol-Reficar/Colombia or Petrobras/Brazil (currently owns Pasadena Coking Refinery) were evaluating options for their increasing production of domestic crude that the Alliance Coking Refinery would be good selection. As article states it would also give PFB Energy some Gulf Coast refining assets to balance /offset its primarily East Coast/Europe Atlantic refining assets. Israel /Delek would do well to add it alongside existing Tyler (La Gloria) coking refineries as well.

    Regards

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