Premcor: Low-sulfur regulations force refinery closure

Premcor Inc. St. Louis, Mo., said it would permanently close its refinery in Blue Island, Ill., at the end of the month. Premcor said new low-sulfur fuel regulations will make the refinery no longer cost effective. Premcor said it would focus on higher-return projects at its other three refineries.


Premcor Inc. St. Louis, Mo., said Wednesday it would permanently close its 76,000-b/d refinery in Blue Island, Ill., at the end of the month.

Premcor said the refinery won't be cost effective under the Environmental Protection Agency's new low-sulfur fuel regulations (OGJ, Jan. 1, 2000, p. 7).

The company said although it had spent $70 million on the refinery over the last 5 years, the plant does not generate a return sufficient to justify the additional investment needed to meet "the next wave of low-sulfur, cleaner-burning fuels."

Instead, Premcor will focus on higher-return projects at its other three refineries. It operates a 68,000-b/d refinery at Hartford, Ill., a 165,000-b/d plant at Lima, Ohio, and a 225,000-b/d refinery at Port Arthur, Tex.

"Premcor has had discussions with several parties who may have an interest in buying the refinery. None of those parties has yet put forward an acceptable offer to purchase the refinery,'' said William C. Rusnack, president and CEO of Premcor. "Premcor will consider serious proposals from credible buyers, but will continue with the shutdown process unless it receives an acceptable offer.''

Premcor will continue to operate its petroleum products storage facility adjacent to the Blue Island refinery.

The Premcor Refining Group Inc., a subsidiary of Premcor unit Premcor USA Inc., will take a pretax charge to earnings of $150 million in the first quarter, of which $100 million is asset write-downs.

Rusnack also said the company is near completion of an $835 million heavy oil coker upgrade and expansion at its Port Arthur refinery (OGJ Online, July 21, 2000).

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