Sunoco closing Puerto Rico refinery, three lube plants
Sunoco Inc., Philadelphia, Pa., Wednesday said it would shut its Yabucoa, PR, refinery and its lubricants blend plants in Marcus Hook, Pa.; Tulsa, Okla.; and Richmond, Calif. The refinery will be closed in May, the Marcus Hook plant in July, and the two other blend plants at a later date.
By the OGJ Online Staff
PHILADELPHIA, Mar. 21�Sunoco Inc., Philadelphia, Pa., Wednesday said it would shut its Yabucoa, PR, refinery and its lubricants blend plants in Marcus Hook, Pa.; Tulsa, Okla.; and Richmond, Calif.
The refinery will be closed in May. It has no atmospheric distillation but 34,000 b/cd of vacuum distillation. The Marcus Hook blend plant, which handles products from Yabucoa, will be shut in early July when its inventories are depleted. Timing of the Tulsa and Richmond shutdowns has not yet been finalized.
Sunoco previously had signed a letter of intent to sell the Tulsa and Richmond blend plants, but was unable to reach agreement. Those discussions have been terminated.
The company said it would continue efforts to sell the Yabucoa refinery. It will continue to operate its 85,000-b/cd Tulsa refinery to make the current slate of fuels and lubricant products for sale into wholesale markets.
John Drosdick, Sunoco chairman, CEO, and president said the four facilities to be closed were not generating a sufficient return on capital employed.
He said, "Over the past 6 months, we have had discussions with a number of parties interested in purchasing these assets, but we have been unable to reach an agreement to sell the refinery or the lubricants blend facilities. Throughout the restructuring process, we have carefully considered the impact on our employees and the surrounding communities of shutting down these facilities.
�However, with the impending sale of our branded business and the absence of acceptable offers for the other assets held for sale, we must now move forward with the shutdown process and conclude the restructuring of this business. We will continue to consider any credible purchase offers for the refinery which we receive in the future."
The company previously said it would sell its Kendall motor oil brand, the customer lists, and other related assets for both the Sunoco and Kendall brands to Tosco Corp. That transaction is expected to close by Mar. 31. The Sunoco trademark is not part of the sale.
In the third quarter of 2000, Sunoco recorded a $123 million after-tax non-cash charge to write-down the three lubricants plants to their estimated realizable values. It plans an after-tax charge of $55 million in the first half of 2001 for employee terminations and other required exit costs.
Sunoco said it expects operating income of $1.00 to $1.11/share ($85 to $95 million) for the first quarter of 2001.