By OGJ editors
HOUSTON, Oct. 6 -- Another US independent refiner is slashing operations in response to low refining margins.
Sunoco Inc., Philadelphia, is idling its 150,000-b/d Eagle Point refinery at Westville, NJ, citing “a recessionary economy, weak demand for refined products, and increased global refining capacity.”
The refinery is interconnected with Sunoco’s refineries at Philadelphia and Marcus Hook, Pa., which form a complex with crude capacity totaling 655,000 b/d.
Sunoco said Eagle Point is the least integrated of the three refineries. The closure will enable the company to increase capacity utilization at the other two facilities and to keep total output by the complex essentially unchanged.
Another independent refiner that has made deep cuts in its operations is Valero Energy Corp., which has shut major units at its Delaware City, Del., and Corpus Christi, Tex., refineries and shut down its refinery in Aruba (OGJ, Sept. 14, 2009, Newsletter).
Sunoco said it will keep the Eagle Point refinery closed until market conditions improve or until it implements other options, which might include using the facility to produce alternative fuels.
In June the company bought a 100 million gal/year ethanol plant at Volney, NY, from bankrupt Northeast Biofuels LP for $8.5 million (OGJ Online, June 18, 2009).
At Eagle Point it will furlough about 400 employees, who will have the option of returning to work if the refinery resumes operation. It will offer the workers a voluntary severance package.
Product storage and handling work will continue at the site, and the Sunoco Logistics Partners LP products rack will remain open.
Sunoco’s 170,000-b/d Toledo, Ohio, refinery is unaffected by the move.
Sunoco estimated that idling the Eagle Point refinery will reduce pretax expenses by $250 million/year. It expects to incur pretax charges of $475-550 million, mostly noncash, from asset impairment and idling costs.
The company already had in place an effort to cut costs by $300 million/year by the end of 2009. In its announcement of the Eagle Point closure, it said it would cut its dividend in half to save about $70 million/year.