September 6, 2011 at 1:11 pm #2134
I listened to the live webcast.
They may consider converting Philadelphia to terminals if they cant sell. May even sell properties for other developments (like an ethylene cracker).
UPDATE 3-Sunoco to exit refining; focus on pipeline, retail ops
Tue Sep 6, 2011 12:49pm GMT
* Has begun process to sell Philadelphia, Marcus Hook refineries
* Credit Suisse to assist in strategic review process
Sept 6, 2011 (Reuters) – U.S.-based energy company Sunoco Inc plans to exit its low-margin refining business to focus on its more-profitable pipeline and retail marketing operations.
The move is the latest shift in the U.S. refining market that has seen Marathon Oil splitting off its refining arm and ConocoPhillips seeking to break into two, as companies reorganize businesses to adjust to the changing economics in the oil products markets.
Sunoco’s refining margins are weighed down as it processes more expensive grades of oil in the U.S. East Coast where it has its refineries. Other refiners, in contrast, source less costly crude in the middle of the country where supplies are large.
“Given the unacceptable financial performance of these assets… it is in the best interests of shareholders to exit this business and focus on our profitable retail and logistics businesses,” Chief Executive Lynn Elsenhans said in a statement.
Sunoco has tried to differentiate its refining business by running high acid crude streams to increase margins, but these crudes necessitate longer maintenance turnarounds to deal with the damage done to the refinery from the acid.
Its refineries also do not have coking capacity, so they cannot run heavy, sour crude streams without producing a lot of residual fuel oil — for which is there is no market.
Cokers are used to destroy that residual fuel oil and produce more gasoline and distillate.
The company has begun a process to sell its 335,000 barrel-per-day (bpd) Philadelphia refinery and the 178,000 bpd Marcus Hook, Pennsylvania, refinery.
Sunoco said it would pursue all options to sell the refineries, but if it was unable to strike a suitable deal, it would idle the main processing units at the facilities in July next year.
Two potential buyers could be Norwegian oil company Statoil and Russia’s second-biggest oil producer LUKOIL .
At present LUKOIL is not interested in purchasing any refining capacities, especially in the USA, the company said in an e-mailed response. Statoil did not immediately respond to an e-mail seeking comment.
The company will hold a strategic review to explore ways to use its “strong cash position and maximize the potential for its logistics and retail businesses.” Credit Suisse will assist Sunoco in the strategic review process.
Sunoco’s retail marketing arm, which sells gasoline and middle distillates, runs convenience stores in at least 23 states.
Its logistics business, operated by Sunoco Logistics Partners LP , has refined product and crude oil pipelines as well as terminals.
Sunoco expects a pretax non-cash charge of $1.9-$2.2 billion in the third quarter related to impairment of the plant and equipment in its refineries.
If the processing units are idled, additional pretax charges of up to $500 million may be incurred.
Sunoco has already completed the sale of its 170,000-bpd Toledo refinery in Ohio to PBF Holding for $400 million. In May, it sold a chemicals plant in Philadelphia to Honeywell International for about $85 million.
Sunoco also spun off its coal production unit SunCoke Energy Inc and investors welcomed the debut of the producer of steel-making coke’s shares.
Sunoco’s shares, which have fallen 10 percent so far this year, closed at $36.11 Friday on the New York Stock Exchange
September 6, 2011 at 1:15 pm #4942
Here is update from a contact on Sonoco’s plans to exit Refining & become Pipeline/Terminal/Retail operation. Good chance Philadelphia will be converted to terminal if it doesnt sell. Mentions sale of Toledo Refinery & Philadelphia Chem Plant.
Article also mentions none of its plants have cokers, and notes it spun off its Subsidary SunCoke Energy – Coal Coke producer for Steel industry.
<Note: SunCoke plant used make Pitch from Coal Tar for Aluminum Industry which used with green anode petcoke to make anodes for smelters – after Environmentally required BACT revisions to CoalCoke Furnace’s – it now burns coal tar as fuel for process. Just another process Alcoa/Alum. smelters failed to JV invest and preserve critical raw material producer..>
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