Carlye Comes Riding to the Rescue

abarrelfullabarrelfull wrote on 03 Jul 2012 07:25
Tags: carlye refinery refining sunoco usa

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Out of the three refineries in Pennsylvania that were going to close, only one has not been saved. First Delta Airways acquired the Trainer Refinery in a deal that surprised everyone. Now Private Equity group Carlye has made a deal with Sunoco and saved the Philadelphia Refinery.

The deal was expected, its the details that are interesting.

Upgrade the Catalytic Cracker: The joint venture will upgrade and refurbish the cracker, improving reliability and operating performance. The project will create more than 1,000 contracting jobs when the upgrade commences.
Build High-Speed Train Unloading Facility at Refinery: Provide access to greater quantities of crude oil from North America (versus imported crude), particularly high-quality, low sulfur crude from the Bakken region in North Dakota.
Build Mild Hydrocracker and Hydrogen Plant: By converting the existing middle distillate Hydrotreater into a Mild Hydrocracker and constructing a natural gas-based hydrogen plant, the refinery will produce a more environmentally friendly mix of refined products. The project will create several hundred construction jobs.

Back in April, in another blog, I highlighted a major problem with those refineries in trouble. A lack of:

Access to and ability to process low cost raw materials

The Philadelphia Refinery has been processing some of the most expensive crudes in the world. Now the investment plan involves the quickest and lowest investment cost solution to the problem. Railway transportation. With all the new loading facilities being built in the Bakken, there is going to be good availability of crude to be transported this way

There is also a plan to convert a desulphurisation unit into a hydrocracker, and a plan to revamp the FCC. These are rapid low cost methods of improving product yields.

Other unspecified investments are to be looked at, particularly related to the Marcellus Shale Gas Fields.

All in all, a well thought out plan with a good degree of success. Good Luck.

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