By RYAN DEZEMBER
Private-equity firm The Carlyle Group has agreed to take
over operations of Sunocos Philadelphia refinery, staving
off the scheduled closure of the East Coast's largest producer
of gasoline, diesel, heating oil and other fuels.
The deal, announced on Monday, is expected to ease
concerns that a rash of refinery closings along the Atlantic
Ocean could result in fuel shortages and rising prices for
products like diesel and gasoline this summer on the East
coast, as the US Energy Information Administration warned
earlier this year.
The refinery under Carlyle is expected
to become a major new user of the domestic crude that has
backed up at an Oklahoma trading hub unable to reach coastal
The Philadelphia refinery could begin processing US
crude by the beginning of next year, increasing its demand over
time, said people familiar with the matter.
That would help US oil producers and could help reduce the
price difference between global and US oil, which stands at
Under terms of the deal, which was announced Monday morning,
Carlyle will take over operations of the facility and gain a
controlling stake in the joint venture that will own it, the
The facility can process up to 335,000 bpd of crude.
Carlyle won't pay Sunoco, which is exiting the refining business ahead of its
planned merger with pipeline operator Energy Transfer Partners,
Instead, Carlyle will pay to keep the facility running and
spending "well into" nine figures on updating the facility and
connecting it to rail lines that will give it access to North
Dakota's prolific Bakken Shale formation, they said.
Sunoco will retain about a one-third interest in the
facility, essentially foregoing upfront payment in exchange for
future payoffs should Carlyle succeed in returning the refinery
to profitability, they said.
Philadelphia-based Sunoco is repositioning itself as an oil
distribution company and retailer ahead of its merger.
Carlyle has seen big returns before in refining. It and Riverstone Holdings
quintupled their money buying European refiner Petroplus
Holdings and reselling it about two years later.
All current workers, about 850, are expected to retain their
jobs at the facility, which may add as many as 200 new
positions as the refinery is updated and connected to
rail lines, according to people familiar with Carlyle's
The Wall Street Journal (via Dow Jones