Island Energy Services LLC (IES), a subsidiary of One Rock Capital Partners LP, New York, has decided to cease refining operations at its 54,000-b/d Kapolei, Ha., refinery on the island of Oahu as part of a shift in its strategic focus, which will be dedicated instead to logistics and retail operations.
As part of the transition, IES has reached an agreement to sell select refinery assets to Par Pacific Holdings Inc., Houston, which Par Pacific will use to supplement subsidiary Par Hawaii Refining LLC’s own nearby 94,000-b/d refinery on Kapolei to help IES fulfill its existing contractual obligations with Hawaiian Electric Co., Maui Electric Co., Hawaii Electric Light Co., and Kauai Island Utility Cooperative, the companies said.
Par Pacific also has agreed to enter into a long-term agreement with IES to use IES’ retained logistics assets for storage and throughput of crude oil and related products necessary for operation of Par Pacific’s newly acquired refining assets, the operators said.
Par Pacific said it expects to hire about 65 IES employees in connection with the acquisition, as well as possibly add another 20 IES employees at Par Hawaii Refining’s Kapolei refinery in conjunction with the new investment.
Neither IES nor Par Pacific—Hawaii’s only refiners—anticipate any disruption to Hawaii’s supply of petroleum products as a result of the transaction that, subject to satisfaction of customary closing conditions, is scheduled to close before the end of this year’s fourth quarter.
Following the transaction, IES and Par Pacific will continue to operate as independent competitors.
While it will eliminate its refining business, IES said it expects to reinvest net sale proceeds in Hawaii to further expand its current logistics infrastructure, which includes a network of tank farms, pipelines, and other distribution assets, as well as its large-scale Kapolei import terminal.
“We look forward to maintaining our role as a trusted local fuel supplier for the state as we respond to changing market conditions, industry regulations and Hawaii’s long-term energy mandate,” said Jon Mauer, chief executive officer of IES.
“The closure of one of Hawaii’s refineries was anticipated in 2014 by the governor’s Hawaii Refinery Task Force. As the owner and operator of Hawaii’s remaining refinery, we recognize our role in meeting the essential demand for petroleum products today and to ensure continuity and a smooth and practical transition to Hawaii’s clean energy future,” added William Pate, Par Pacific’s president and chief executive officer.
IES completed the acquisition of its Kapolei refinery—which processes mainly sweet crudes—from Chevron USA Inc. in 2016, while Par Pacific (formerly Par Petroleum Corp.) purchased its Kapolei refinery from Andeavor (formerly Tesoro Corp.) in 2013 (OGJ Online, Nov. 10, 2016; Sept. 27, 2013).
Contact Robert Brelsford at [email protected].
