December 2, 2011 at 12:20 pm #2031
Sunoco abruptly shuts Marcus Hook refinery
By Andrew Maykuth Inquirer Staff Writer Posted: Fri, Dec. 2, 2011, 6:12 AM
APRIL SAUL / Staff Photographer
Sunoco Inc., blaming deteriorating market conditions, on Thursday said it would immediately shut down its historic Marcus Hook refinery ahead of a July 2012 deadline.
The beleaguered Philadelphia refiner said all but 100 of the 590 employees at the Delaware River operation would lose their jobs within two to three months. Hundreds of contractors lost their jobs immediately.“This was a very difficult decision given the impacts to employees and nearby communities, and we will work closely with them throughout this process,” Sunoco’s chairman and chief executive officer, Lynn L. Elsenhans, said in a statement.
Local political and labor leaders were furious.
“I understand they’re losing money, but it wouldn’t kill them to hold out through the holidays,” said James Schiliro, the mayor of Marcus Hook. “They just crushed everyone’s holiday.”
Dennis Miller, president of the United Steel Workers local that represents 300 refinery workers, said the shutdown would reduce the Delaware County borough to “a ghost town.”
Miller said he walked out of a meeting Thursday after management officials told him they planned to idle the refinery now rather than wait until July 1, the deadline the company set for either finding a buyer or shutting down the plant.
Labor and political leaders have been holding rallies to try to recruit buyers to keep the 178,000-barrel-per-day plant open.“To have them come up and slap us like this is just an insult,” said Miller.
Sen. Pat Toomey (R., Pa.) said he was “deeply disappointed by this terrible news for the Marcus Hook community.”
“I remain committed to working together with the rest of the Pennsylvania delegation to find willing buyers for the refinery so that these jobs can be saved,” Toomey said in a statement.
Thomas P. Golembeski, Sunoco’s spokesman, said that 65 Marcus Hook salaried employees would be redeployed within the company. Sunoco intends to increase the utilization rate of its remaining refinery, the 300,000-barrel-per-day plant in Philadelphia, which is also under a July 1 deadline to be sold or shut down but could be idled earlier if market conditions deteriorate.
Laid-off salaried employees will be paid for 60 days and are eligible for severance benefits and job-placement services. Unionized workers will be paid for 90 days.
Miller said the union plans to dispute the terms because its contract with Sunoco requires a six-month shutdown notice.
Only 35 employees would remain at Marcus Hook after the plant is idled, Golembeski said.
Sunoco said that profit margins for motor fuel had declined dramatically since it announced plans in September to exit the refining business and focus the company on retail fuel sales and its logistics unit that transports fuel mostly by pipelines.
“Market conditions have deteriorated significantly and the outlook for both motor fuel demand and refining margins remains weak,” Elsenhans said in the announcement, which was released after markets closed Thursday.
“Our retail and logistics businesses are performing well, but given the negative realities of the Northeast refining marketplace, we need to accelerate the timeline for idling our Marcus Hook processing units.”
The closure, along with the ongoing shutdown of the neighboring Conoco Phillips refinery in Trainer, will have profound economic implications in the region. Several hundred contractors who work at the Marcus Hook plant were discharged Thursday night, said Miller, the union chief.The Marcus Hook refinery also supplies raw materials under a long-term agreement to the adjoining polypropylene plant owned by Braskem S.A., a Brazilian company that bought Sunoco’s chemical operations last year.Sunoco’s separate racing-fuels unit in Marcus Hook will remain operating, Golembeski said.
Refineries across America have been hit hard by declining fuel sales and disappearing profit margins. But older refineries like Sunoco’s that depend upon more expensive low-sulfur crude oil from Africa or the North Seas have suffered even more.
Golembeski said Sunoco decided to keep the Philadelphia refinery open for now because it produces more distillate fuels – diesel, heating oil, and jet fuel – that have better margins. “Both refineries are losing money, but Marcus Hook is losing more,” he said.
Sunoco opened the Marcus Hook refinery in 1901 to refine crude oil brought by ship from Texas. It was the first of seven Delaware River refineries that made up the largest fuel-manufacturing center in the Northeast.
Marcus Hook was the second refinery developed by the Pew family, which built Sunoco into a major integrated oil company by the middle of the 20th century.
Contact staff writer Andrew Maykuth at 215-854-2947, @Maykuth on Twitter, or email@example.com.
December 2, 2011 at 12:21 pm #4820
Here is update on closure Sunoco’s Marcus Hook Refinery – moved months ahead of its July 2012 announced date. As article mentions it is second of 7 Delaware River refineries that Pew family built into a major Sunoco refining oil company.
The local politicians and labor groups have made lot angry comments but the anti-oil industry atmosphere, barrier against expansion and crushing environmental regulations of East Coast were responsible for all these older, sweet crude refineries becoming un-economic in todays market. The realization of jobs lost, tax base income loss & supply offset for fuel demand pricing realizations come too late and too little appreciated by pervasive liberal attitudes against oil industry. Particularly hard hit for area refineries was change on distilate diesel & Fuel Oil Sulfur specs/regulations on East Coast where produced EC product had 40% in High Sulfur range that required major capital investments & even then would see severe hit on plant profitability.
The East Coast has now pulled ahead of West Coast/California in killing off vital US refining operations concentrated now in just 7 states and 3 regions (East, West & Gulf Coast) which supply the other 39 states who have little to no refining operations comparatively. The smaller total number refineries on East Coast and larger number closures/terminal conversions/removal -will make the results region gas/diesel cost felt quickly.
East Coast Refinery Body Count: Sunoco Marcus Hook 178MBD is now closing Dec 2011; COP Trainer 185MBD to close 4Q2011, Sunoco Westiville 150MBD (idled since 2010) rumored dismanteled & moved India by 1Q2012; Sunoco Philadelphia 300MBD to sell /convert terminal July 2012; and recent Western Yorktown 70MBD (economic idle 2009) sold Plains All-American P/L mostly for terminal & its Colonial Crude P/L assets Dec 2011.
The closure of Valero’s Delaware 190MBD (S/D 2009 – sold Jul 2010) & Paulsboro 185MBD (sold Dec 2010) refineries were reversed by sales to Omalley’s PBF Energy Co which has restarted both coking refineries with limited investments for fuel sulfur – but economic outcome will still be open for review.
December 3, 2011 at 9:15 pm #4818
Firm that bought Sunoco’s Marcus Hook factory to fight to keep refinery open
By Linda Loyd
Inquirer Staff Writer Dec 3, 2011
The Brazilian company that bought Sunoco Inc.’s polypropylene factory in Marcus Hook, and relies on Sunoco’s refinery next door to supply raw materials, said Friday it will pursue “all legal actions and remedies available” to keep its plant running.Braskem S.A., a large plastics resin producer based in Sao Paulo, bought three Sunoco polypropylene plants in 2010 with the goal of becoming one of the top five petrochemical companies in the world. With Sunoco’s announcement Thursday that it would shut its Marcus Hook refinery immediately, ahead of a July 1 deadline, Braskem said it was consulting with legal counsel and evaluating options to keep its business running. Does that mean Braskem might sue Sunoco to keep the refinery open longer, or to guarantee continued material supply under a long-term agreement?
Braskem declined to elaborate beyond a company statement:
“Braskem is going to pursue both short and long term options to continue to operate our Marcus Hook polypropylene plant, including the use of all legal actions and remedies available,” the company said.
“As the largest producer of polypropylene in the United States and the Americas, we remain focused on minimizing any impact of Sunoco’s actions to our customers by utilizing our global asset base,” the statement said.
“Braskem remains fully committed to our Marcus Hook polypropylene facility and to its continuing operations and we want to reinforce such commitment to our employees and stakeholders.”
Sunoco spokesman Thomas Golembeski said, “We are working closely with Braskem on the situation.”
Luiz de Mendona, CEO of Braskem America, told The Inquirer in October that he was confident he could find material from other Northeast refineries to keep the plant open, even if the Sunoco refinery closed.
When the $350 million sale was announced in February 2010, Braskem said the Sunoco chemical subsidiary had attractive margins and gave the Brazilian company a foothold from which it could expand in the United States.About 100 employees work at the Marcus Hook facility, which produces 770 million pounds of polypropylene a year.
Sunoco sold the chemical unit, which was the fourth-largest U.S. supplier of polypropylene, as part of a broad effort to improve earnings, which were hammered in the recession. The sale included manufacturing facilities in La Porte, Texas, and Neal, W.Va.
Polypropylene plastic is used in cups, containers, bottle caps, automotive parts and pipes, fiber in carpet and upholstery, and plastic films for tapes and labels.
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