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PES to shut Philadelphia refinery after fire
PENNSYLVANIA
PHILADELPHIA Energy Solutions (PES) con- rmed on June 26 that it would seek to perma- nently shut down its re nery in the Pennsylvania city a er a major re caused extensive damage to the facility.
The 335,000 barrel per day refinery is the largest and oldest on the US East Coast, and the move will squeeze gasoline supplies in the heav- ily populated region.
“ e recent re at the re nery complex has made it impossible for us to continue operations. We are grateful that the re resulted in only a few minor injuries,” PES’ CEO, Mark Smith, said in a statement. “We are committed to an orderly pro- cess to safely wind down our operations.”
Smith went on to say the company would “position the refinery complex for a sale and restart”,thoughthiscouldtakeyears.
The move is expected to result in the loss of hundreds of jobs. Sources familiar with the matter told Reuters that around 100 non-union employees would be laid o immediately, with a “signi cant” number of the 700 union employees expected to lose their jobs in mid-July.
e re nery’s union has estimated that the closure will cost tens of thousands of jobs when contractors and other businesses that rely on the plant are taken into account.
“The impact of the closure will be a mas- sive blow to the local economy,” the head of the union, Ryan O’Callaghan, said.
The refinery burst into flames on June 21 in a series of explosions. e cause of the re remains unknown, but city re o cials have said it started in a butane vat. e incident was the second re at the facility in two weeks, prompt- ing Philadelphia Mayor Jim Kenney to call for a task force to look into the causes. is task force will now be repositioned to focus on helping the
company transition the site of the re nery and supporting a ected employees, Kenney said in a statement.
e investigation could take months or years, however, according to city o cials, who warned that investigators at the site were encountering unstable structures that need to be certi ed by engineers, slowing down the inquiry.
e impending closure is the latest blow for the re nery, which has already su ered from several years of nancial instability. Indeed, PES went through a bankruptcy process last year in order to reduce debt, emerging in the summer of 2018. However, the company’s nancial woes continued, and in January PES dramatically scaled back a large maintenance project in the section where the explosion occurred, Reuters reported citing sources familiar with operations.
After the company emerged from bank- ruptcy, Credit Suisse Asset Management and Bardin Hill became the controlling owners of PES, with former primary owners Carlyle Group and Energy Transfer subsidiary Sunoco Logistics retaining a minority stake.
Even if a buyer for the refinery is found, restarting it will take time given the extensive damage to its processing capabilities. Onyx Advisory said in a note that the Girad Point sec- tion of the two-part facility, which contributed 200,000 bpd to output, could be o ine for an extended period given the scope of the damage caused.
“ is is surely one of the most serious re n- ery incidents to hit the market recently, and the expected down time is extensive,” Onyx said. e rm added that in the short term, the US North- east could see ows of gasoline redirected from the Gulf Coast and Europe to cover shortfalls caused by the PES re nery outage.™
Even if a buyer for the re nery is found, restarting it will take time given the extensive damage to its processing capabilities.
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w w w . N E W S B A S E . c o m Week 25 27•June•2019