Sunoco, Exiting Oil Refining, Puts Last Two Plants on Block

by OGJ editors, OGJ, Houston, Sept 6, 2011
Sunoco Inc., Philadelphia, hopes to sell its remaining two refineries and plans to leave the oil refining business to complete what it calls “a fundamental shift away from manufacturing.” [Please see remarks below -- D.R.]

The company has retained Credit Suisse Securities (USA) LLC to help it review strategy.

It will try to sell its 330,000-b/cd refinery in Philadelphia and 175,000-b/cd facility at Marcus Hook, Pa. If unsuccessful, it will idle the main processing units in July 2012.

Key processing capacities at Philadelphia are 113,500 b/cd of fluid catalytic cracking, 68,000 b/d of catalytic reforming, 85,600 b/cd of catalytic hydrotreating for pretreatment of reformer feeds, and 78,000 b/cd of cat hydrotreating for diesel desulfurization. The Philadelphia refinery also has 16,700 b/d of alkylation (hydrofluoric acid) capacity.

The Marcus Hook refinery has capacities of 93,000 b/cd for FCC, 15,600 b/cd for cat reforming, 36,000 b/cd of cat hydrotreating for reformer feed, and 12,000 b/cd of posthydotreating for FCC naphtha. It has 10,000 b/d of alkylation (sulfuric acid) capacity.

Restructuring

Sunoco has been restructuring for several years. Earlier this year it completed the sale of its 170,000 b/d refinery in Toledo, Ohio, to Toledo Refining Co. LLC, a unit of PBF Holding Co. LLC (OGJ Online, Mar. 1, 2011).

In 2010 it shut a 150,000 b/d refinery at Eagle Point, NJ, and [in 2009 -- D.R.] sold an 85,000-b/d refinery in Tulsa to Holly Corp. (OGJ Online, June 16, 2010).

It also sold its polypropylene [PP -- D.R.] business, Sunoco Chemicals Inc., to Braskem SA, and shut down a PP plant in Texas (OGJ Online, Apr. 6, 2010). And it is separating its metallurgical coke business through an initial public offering of shares in SunCoke Energy.

The company expects to incur pretax noncash charges of $1.9-2.2 billion in the third quarter as it exits refining. The charges relate to impairment of plant and equipment. If it must idle process units, it expects additional pretax charges of as much as $500 million related to contract terminations, staffing costs, and severance.

Sunoco has been expanding its remaining business units, retail marketing and logistics.

The company has more than 4,900 branded retail locations in 24 states, with APlus convenience stores operated by it or dealers in 600 of the retail outlets.

It also holds 35% [sic -- D.R.] interest in and is general partner of Sunoco Logistics Partners LP, a publicly traded master limited partnership that operates 3,350 miles of crude oil trunkline, 500 miles of crude oil gathering lines, and 2,500 miles of oil product pipelines. [Full story]

(Please see Sunoco's website/news room: "Sunoco to Exit Refining and Conduct Strategic Review of the Company," Sept 6, 2011. As of Jan 1, 2011, Sunoco, with crude oil distillation capacity of its three refineries---Marcus Hook, Toledo and Philadelphia---of 673,000 barrels per day, was ranked 10th on the list of top 20 U.S. refiners---please see my post "Top 20 Largest Refining Companies/Refiners in the U.S. as of Jan 1, 2011." PBF Energy Company LLC on Tuesday, March 1, 2011, announced that its subsidiary, Toledo Refining Company LLC, has completed its purchase of the Toledo Refinery in Ohio from Sunoco, Inc. It is worthy of note that Sunoco has owned refineries for 117 years. Formerly known as the Sun Oil Company of Ohio, it bought its first refinery in 1894. -- D.R.)

Top 28 Largest Refineries in the U.S. as of Jan 1, 2011 -- EIA

by Aaron and David Rachovich

U.S. Refineries* Operable Capacity 

Rank  Jan 1, 2011	Corporation	Company	State	Site	Barrels per Calendar Day (b/cd)
1.	Exxon Mobil	ExxonMobil Refining & Supply	Texas	Baytown	560,640
2.	Exxon Mobil	ExxonMobil Refining & Supply	Louisiana	Baton Rouge	502,000
3.	Hovensa LLC (50% Hess, 50% PDVSA)	Hovensa LLC	Virgin Islands (territory of the U.S.)	Kingshill	500,000
4.	Marathon Oil	Marathon Petroleum	Louisiana	Garyville	464,000
5.	PDV America Inc	Citgo Petroleum	Louisiana	Lake Charles	427,800
6.	BP PLC	BP Products North America	Texas	Texas City	406,570
7.	BP PLC	BP Products North America	Indiana	Whiting	405,000
8.	WRB Refining LLC (50% ConocoPhillips, 50% Cenovus)	WRB Refining	Illinois	Wood River	362,000
9.	Exxon Mobil	ExxonMobil Refining & Supply	Texas	Beaumont	344,500
10.	Sunoco Inc	Sunoco Inc (R&M)	Pennsylvania	Philadelphia	335,000
11.	Chevron	Chevron USA Inc	Mississippi	Pascagoula	330,000
12.	Deer Park Refining LTD Ptnrshp (50% Royal Dutch/Shell, 50% Pemex)	Deer Park Refining	Texas	Deer Park	327,000
13.	Valero Energy	Premcor Refining Group	Texas	Port Arthur	292,000
14.	Koch Industries	Flint Hills Resources	Texas	Corpus Christi	290,078
15.	Motiva Enterprises LLC (50% Royal Dutch/Shell, 50% Saudi Aramco)	Motiva Enterprises LLC	Texas	Port Arthur	285,000
16.	Access Industries	Houston Refining LP	Texas	Houston	280,390
17.	Chevron	Chevron USA Inc	California	El Segundo	273,000
18.	Koch Industries	Flint Hills Resources	Minnesota	Saint Paul	262,000
19.	BP PLC	BP West Coast Products	California	Los Angeles	253,000
20.	ConocoPhillips	ConocoPhillips Co	Louisiana	Belle Chasse	247,000
21.	ConocoPhillips	ConocoPhillips Co	Texas	Sweeny	247,000
22.	Chevron	Chevron USA Inc	California	Richmond	245,271
23.	ConocoPhillips	ConocoPhillips Co	Louisiana	Westlake	239,400
24.	Exxon Mobil	ExxonMobil Refining & Supply	Illinois	Joliet	238,600
25.	ConocoPhillips	ConocoPhillips Co	New Jersey	Linden	238,000
26.	Motiva Enterprises LLC (50% Royal Dutch/Shell, 50% Saudi Aramco)	Motiva Enterprises LLC	Louisiana	Convent	235,000
27.	Motiva Enterprises LLC (50% Royal Dutch/Shell, 50% Saudi Aramco)	Motiva Enterprises LLC	Louisiana	Norco	233,500
28.	Total SA	Total Petrochemicals Inc	Texas	Port Arthur	232,000

*Only refineries with atmospheric crude oil distillation capacity.

Source: U.S. Energy Information Administration/EIA, Ranking of U.S. Refineries, Updated/Reviewed June 2011.

(ExxonMobil's Baytown Refinery is the largest oil refinery in the United States. Also, the Baytown area which is home to several of ExxonMobil's integrated sites---including the Baytown Refinery, Baytown Chemical Plant, Baytown Olefins Plant, Mont Belvieu Plastics Plant, Americas Area Engineering Office and Baytown Technology & Engineering Complex---is the largest petroleum & petrochemical complex in the United States. Texas is home to 26 refineries, with a total capacity of 4.72 million barrels per day. Louisiana is home to 19 refineries, with a total capacity of 3.22 million barrels per day. And California is home to 20 refineries, with a total capacity of 1.96 million barrels per day. Nearly half---49%---of U.S. refinery distillation capacity is located in the Gulf Coast region, i.e., PAD district 3 comprising Alabama, Arkansas, Louisiana, Mississippi, New Mexico and Texas. January 2011 U.S. refining capacity of 17.7 million barrels per day, excluding the Virgin Islands, reached the highest level recorded since 1982---please see EIA, Today in Energy, Jun 29, 2011, here. Also, please see "Top 20 Largest Refining Companies/Refiners in the U.S. as of Jan 1, 2011;" "World's Top 25 Largest Refining Companies, Jan 1, 2011 -- OGJ;" "Top 10 Largest Refining Companies in Asia, the USA and Western Europe -- OGJ;" and "World's Top 21 Largest Oil Refineries -- OGJ." Update 1:  Royal Dutch Shell Plc and Saudi Aramco became co-owners of the largest U.S. refinery on Thursday when a new crude distillation unit at their joint-venture Motiva Enterprises Port Arthur, Texas, plant [ranked 15th as of Jan 1, 2011, above -- D.R.] received oil for the first time, said Shell's Chief Financial Officer. The 325,000 barrel-per-day (bpd) atmospheric crude distillation unit that started processing on Thursday combines with existing crude units to give Motiva's Port Arthur, Texas, refinery a total crude oil refining capacity of 600,000 bpd, said Shell Chief Financial Officer Simon Henry during the company's first quarter earnings call. […] With the startup of the new Port Arthur crude unit, Exxon Mobil Corp's 560,640 bpd Baytown, Texas, refinery becomes the nation's second-largest refinery---please see "Motiva Port Arthur refinery becomes U.S. largest - Shell," Reuters, Apr 26, 2012. Update 2: But by far the biggest refining story in North America in 2012 centered on the massive expansion at Motiva Enterprise LLC's Port Arthur, Tex., refinery. The 325,000 bpd, $10 billion expansion, largest at a US refinery in nearly 40 years and designed for feedstock flexibility, was dedicated on May 31, raising capacity to 600,000 bpd and making it the largest US refinery. On June 9, 2012, however, the new crude distillation unit sprung leaks traced to massive corrosion; a fire ensued and the expansion was shut down. Motiva has since traced the problem to faulty design. The unit will not restart before the end of first-quarter 2013, if then---please see Warren R. True and Leena Koottungal, "Asia, Middle East lead modest recovery in global refining," OGJ, Dec 3, 2012 -- D.R.)