BP looking to sell Texas City, Carson refineries

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, Feb. 1 -- BP PLC is seeking buyers for its Texas City, Tex., refinery and the Carson, Calif., refinery near Los Angeles, as part of a strategy in which BP plans to reshape its downstream business, slashing its US refining capacity in half.

The US remains an important market for BP fuels, said Iain Conn, BP chief executive refining and marketing, adding that BP plans to focus its future downstream investment on other US refining and marketing networks.

Conn told reporters on Feb. 1 that he expects the sale of the two refineries could bring more than $3.7 billion total. BP expects to complete the anticipated sales of the Carson and Texas City refineries by the end of 2012, subject to regulatory and other approvals.

The 251,275-b/cd Carson refinery is part of BP’s integrated fuels systems stretching across southern California, Arizona, and Nevada. It employs some 1,200 employees and 500 contract workers.

Along with the Carson refinery, BP plans to sell its interest in a cogeneration plant, crude and product terminals, and also marketing interests. The sale will involve BP divesting the ARCO brand. BP acquired the Carson refinery in 2000 with its acquisition of ARCO.

Any transaction involving the Texas City refinery will be negotiated to fulfill current regulatory obligations associated with that refinery where a Mar. 23, 2005, explosion and fire killed 15 people and injured 170 others, BP said.

The 451,250-b/cd Texas City refinery lacks strong integration into any BP marketing assets, the company said. BP plans to sell a cogeneration plant along with the refinery, but the company said it intends to keep a chemicals complex adjoining the refinery.

Last year, BP Products North America Inc. agreed to pay $50.6 million in a settlement with the US Occupational Safety and Health Administration to resolve 270 of 709 citations issued to the BP Texas City refinery.

In addition to the $50.6 million, BP agreed to spend $500 million during 2010-16 in a program designed to implement process safety practices and address potential hazards identified through engineering reviews. The $500 million was in addition to the more than $1 billion that BP spent on safety and infrastructure improvements at the Texas City refinery during 2005-09.

The US Chemical Safety and Hazard Investigation Board issued a series of recommendations during a 2-year period. The recommendations were made to BP, the American Petroleum Institute, OSHA, and others (OGJ, Sept. 8, 2008, p. 20).

BP said it plans to focus future downstream investment around its refineries in Whiting, Ind., the Cherry Hill refinery in Ferndale, Wash., and its 50% interest in a joint-venture refinery outside Toledo, Ohio.

“These refineries have greater flexibility to refine a range of crude oils, including heavy grades and on average are more diesel-capable,” than the Texas City and Carson refineries, BP said in a news release.

The ongoing modernization of the Whiting refinery is expected to become operation in 2012, executives said. The 384,750-b/cd refinery is undergoing construction to increase its capacity to process Canadian heavy crude. The modernization is expected to cost $3.8 billion.

A clean-diesel upgrading is going on at BP’s 222,300-b/cd Cherry Point refinery. Outside, Toledo, BP and Husky Energy Inc. jointly own a refinery. BP-Husky Refining LLC is completing an equipment upgrade at the 152,000-b/d Oregon, Ohio, refinery. A continuous catalytic reformer is being added, BP said.

Contact Paula Dittrick at paulad@ogjonline.com.

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