BP wants to sell two US refineries
BP announced today that it is looking to sell two of its US refineries. The company has officially put a for sale sign in front of its refineries in Texas City, Texas, and Carson, California. BP is also seeking a buyer (perhaps the same one) for its associated integrated marketing businesses in southern California, Arizona, and Nevada. BP plans to complete the sales by the end of 2012, and this liquidation of assets would cut in half BPs US refining capacity.
BP plans to focus future downstream investment in the US on further improving and upgrading its other refining and marketing networks in the country, based around the Whiting, Indiana, and Cherry Point, Washington, refineries and its 50% interest in the Toledo, Ohio refinery. So in essence, the company is less interested in the sun-baked climates of the American Southwest and more compatible with a Midwestern vibe. According to BP, these refineries have greater flexibility to refine a range of crude oils including heavy grades, and on average are more diesel-capable than BPs current portfolio. They are also well-integrated with BPs marketing operations and benefit from advantaged and focused logistics infrastructure.
BP plans to sell both the Texas City refinery and the Carson refinery with its marketing network as going concerns and expects significant market interest in the assets. The planned sales will be subject to regulatory and other approvals, and BP will ensure that fulfillment of the current regulatory obligations associated with Texas City are reflected in any transaction.
"The US remains a very important market for BP's fuels, lubricants and petrochemicals businesses and the moves we have announced today will give BP a smaller, but well-positioned and very competitive portfolio of refining and marketing businesses," said Iain Conn, BP chief executive refining and marketing. "I have no doubt that the businesses we are seeking to divest will prove extremely attractive to other operators."
The Carson refinery, south of Los Angeles, is at the heart of an integrated fuels value chain stretching across southern California, Arizona and Nevada. The refinery, which has 265,000 bpd capacity and supplies around 25% of Los Angeles gasoline demand, became part of BP through the 2000 acquisition of ARCO. It employs some 1,200 staff and 500 contractors.
The assets associated with the Carson refinery also to be divested include BP's interests in a cogeneration plant on the refinery site, crude and product terminals and also its marketing interests. As part of this sale, BP expects to divest the ARCO brand (though retaining brand rights for northern California, Oregon and Washington) and to retain ownership of and license the ampm brand.
The Texas City refinery became part of BP with the 1998 merger with Amoco. It is a large, highly complex refinery with 475,000 bpd refining capacity the third biggest refinery in the US, with gasoline manufacturing capability equivalent to approximately 3% of US production. The refinery employs some 2,200 BP staff.
During the last few years, over $1 billion has been invested in modernizing and improving the plant. Much of that investment was driven by the requirements of federal regulators after the March 2005 fire and explosion at the refinery killed 15 workers and injured more than 170 others. Investigation of the accident revealed BP was to blame for subpar maintenance and safety procedures at the plant.
According to BP, they are looking to sell Texas City because it lacks strong integration into any BP marketing assets. The assets to be divested associated with the sale of Texas City also include the cogeneration plant. BP intends to retain the Texas City chemicals complex adjoining the refinery.
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