Premcor cuts staff, takes restructuring charge
Independent refiner Premcor Inc. said it will cut its nonunion staff by about 20% and will record a $10 million restructuring charge in the third quarter related to the reduction.
By OGJ editors
HOUSTON, Sept. 24 -- Independent refiner Premcor Inc. said it will cut its nonunion staff by about 20% and will record a $10 million restructuring charge in the third quarter related to the reduction. The Old Greenwhich, Conn.-based company said the cuts should reduce costs by $15 million/year.
Half of this savings, the company said, would be realized at the operating expense level. The remainder will be reflected in its refining and corporate-level general and administrative expenses, which are expected to fall by $8 million/quarter by the end of first quarter 2003.
Premcor said it will trim its employee base at its Port Arthur, Tex., and Lima, Ohio, refineries. These cuts will take place early next month, the company said. Additional workers will be pared from the company's administrative office in St. Louis. These worker reductions, which are in addition to those announced last April, will take place by the end of first quarter 2003.
"The US refining market remains under significant pressure after 12 months of difficult conditions," said Premcor Chairman, Pres., and CEO Thomas D. O'Malley. "The reduction in workforce. . .is necessary for the long-term financial viability of Premcor," he added.
The company also revealed that it has reduced by 20¢/bbl its crude acquisition costs at its Lima refinery. "Given these and other ongoing improvements to Premcor's operations," O'Malley said, "we are confident that the company can be profitable in 2003 even if refining margins, crude prices, and light-heavy crude differentials remain at the levels we have seen so far this year."
Earlier this month, Premcor confirmed that it will close its 70,000 b/d refinery at Hartford, Ill, in October. (OGJ, Sept. 16, 2002). And earlier this year, the US Department of Justice, Environmental Protection Agency, and the state of Illinois announced a settlement requiring Premcor Refining Group Inc.—a Premcor unit formerly known as Clark Refining & Marketing Inc.—to pay $6.25 million in environmental fines to resolve claims that its 80,000 b/d Blue Island, Ill., refinery (now closed) violated five federal statutes (OGJ Online, Apr. 1, 2002).