Philadelphia Energy Solutions seeks to permanently shut oil refinery - sources

[ceo_energemsier + 1,818]

Gasoline exports from Europe to the U.S. East Coast rose sharply in early July after a fire at a major refinery in Philadelphia left a supply shortage in the densely populated region.

Philadelphia Energy Solutions’ (PES) 335,000 barrel-per-day (bpd) oil refining complex, the largest and oldest on the U.S. East Coast, is set to permanently shut down after it was hit by a devastating fire on June 21.

Benchmark U.S. gasoline refining margins RBc1-CLc1 have gained over 16% since the fire at the plant which supplies around 55,000 bpd of gasoline to the region, according to consultancy Energy Aspects.

Gasoline stocks in the U.S. East Coast, also known as PADD1, dropped last week by 2.327 million barrels, according to data from the Energy Information Administration.

As a result, the economics for shipping gasoline from Europe to the U.S. East Coast improved significantly in recent days, traders said.

A sharp rise in tanker freight rates is, however, weighing on the arbitrage, the traders said.

Around 18 tankers carrying a gasoline cargo of 37,000 tonnes, totalling 666,000 tonnes, or 5.62 million barrels, have been booked out of Europe on the transatlantic route in the first 10 days of July, according to shipping data obtained by Reuters.

A 60,000 tonne cargo of naphtha, used as a gasoline blending component, was also provisionally booked out of the Baltic port of Ust Luga to go on the transatlantic route, according to the data.

Refinitiv Eikon data shows that Europe sent 850,000 tonnes of gasoline to the U.S. East Coast throughout the entire month of June, and 1.63 million tonnes in May.

Europe has traditionally supplied large volumes of gasoline to the U.S. East Coast, but the flow on the transatlantic route decreased in recent years as U.S. domestic production rose.
Source: Reuters

[ceo_energemsier + 1,818]

Biofuels company proposes to buy fire-damaged Philadelphia refinery

S.G. Preston Co is the first company to identify itself as a potential buyer of the refinery, the oldest and largest on the East Coast. PES’s owners halted production at the 335,000 barrel-per-day refinery and put the 1,300-acre (526-hectare) facility up for sale after a June fire damaged one of its gasoline-producing units.

The biofuels company would convert at least a portion of the plant to make renewable diesel, marine diesel and jet fuel. Raw material for the fuels would be fats, oils and grease acquired mainly from surrounding communities, two people familiar with the meetings said.  

“We can use the existing equipment, labor and regional waste streams to show the rest of the country how to bring back our jobs and industries,” Randy LeTang, chief executive of Philadelphia-based S.G. Preston, said in a statement.

Financial terms of its proposal could not immediately be learned.

 

PES did not immediately respond to a request for comment.

S.G. Preston in 2016 agreed to supply airline JetBlue more than 33 million gallons a year of a biofuel blend that is made from 30% plant-based oils and designed to reduce greenhouse gas emissions compared with conventional fuels.

“This is what the PES refinery and other idled or closed oil refineries can become to meet the domestic and global demand for cleaner fuels and energy, and safer air,” said LeTang.     

Company representatives this week met with local trade groups, union officials and members of the city’s economic development agency to discuss the proposal, the sources said.

Some of the local steelworkers union members laid off from PES could be hired by S.G. Preston, the sources said, but it was not clear how many jobs the biofuels plan would create. Most of PES’s 1,100 employees already have been dismissed.

 

Other details about the proposal, including the volume of biofuels that would be produced or the number of employees needed to make the fuels at the site, could not immediately be learned.

PES filed for bankruptcy protection on July 21, a month after a fire damaged the Girard Point side of the refining operation. It is in the process of idling the facility, and shut its last crude unit late last month.

 

 

[Douglas Buckland + 6,308]

On 6/27/2019 at 1:25 PM, Jan van Eck said:

But let us remember that the "debt" was created by the owner, the Carlyle Group  (a hedge fund of speculators and other hot cash), which previously  pulled some $600 million out of the refinery with their "special distribution."  So Carlyle buys the refinery by issuing debt, takes the refinery cash reserves and earnings and pays that to itself, and then walks away leaving the smoking rubble and a pile of debt behind.  Not exactly a high-class operation, that Carlyle Group, now is it?

Carlyle likes to brag that they are "value creators."  They are not.  They are a glorified bottom-feeder hedge fund that specializes in the rape of established business enterprises, leaving the place pillaged.  What those guys fail to understand is that they leave behind a sea of misery, the wrecked local economy and the unemployed.  At some point, I predict that the managers and Directors of Carlyle will find themselves hunted down and shot.  There are far too many guns loose in the USA for the ex-employees of those businesses not to seek revenge for being looted.  If I were Carlyle, I would be looking over my shoulder. 

And yet another good reason for the Second Amendment! 

I did notice that the union is back to threatening a firm that can not possibly survive financially. I suppose it makes sense to them somehow.

[Jan van Eck + 7,558]

On 8/24/2019 at 6:57 AM, Douglas Buckland said:

And yet another good reason for the Second Amendment! 

I did notice that the union is back to threatening a firm that can not possibly survive financially. I suppose it makes sense to them somehow.

That firm can survive very nicely (and make money) if the owners put some cash into it, and the product mix is changed. Right now the owners put the plant into a Chapter 11 bankruptcy, borrowed some $65 million for expenses, let all the workforce go with zero severance and zero right or ability to buy into the health-insurance plan  (which is going to be a real problem for the workers, likely bankrupting a number of them also, and possibly having those workers lose their homes and end up penniless).  But the owners refuse, and prefer to take $1.25 billion in future insurance payouts, then sell the site for whatever it could fetch  (at some premium over scrap value).  That has been the pattern with various Maine paper mills that also filed for bankruptcy. 

Meanwhile, the insurers are refusing to pay the claims.  That is a position that many American automobile drivers find themselves in:  insurers who refuse to pay, stiffing the customer.   They have learned well at the feet of Wall Street. 

Quote:     "To emerge from bankruptcy, PES needs to tap into $1.25 billion in property damage and loss of business insurance coverage, according to court filings. So far, PES has been denied requests for payment, and at least one creditor has surfaced to fight for any future insurance proceeds. Seven others are objecting to PES’ bankruptcy plan."    From Reuters. 

Meanwhile, Europe is exporting staggering amounts of finished grades of gasoline to the US East Coast, effectively stealing market share.  European refineries in places such as Rotterdam have excess capacity and can manufacture gasoline at their marginal-cost of production, thus earning a handsome profit on the America trade.  American workers can stay home, unpaid.  Welcome to Wall Street capitalism, Carlyle Group style. 

Edited August 25, 2019 by Jan van Eck

[BenFranklin'sSpectacles + 762]

On 6/29/2019 at 7:05 PM, ceo_energemsier said:

I am referring to modern ones that are going to be built, essentially zero emissions, just about everything on a closed loop system. Minimal emissions from a stationary source. And yes we are in the process of building 3 of those , build out is in several phases and produce ultra clean fuels, biofuels (non food crop) and integrated with recycling, upgrading and blending of used cooking oils etc.

I'd love to read more about these refineries.  What keywords should I search?

[Guest]

On 6/28/2019 at 4:28 PM, Ward Smith said:

And as papa said, never wrestle with a pig in the mud, you're just going to get filthy and the pig enjoys it. 

 

On 6/28/2019 at 4:51 PM, Jan van Eck said:

I'm still laughing!  You made my day!

 

Haha me too, that's one of the best lines I've heard for weeks. Wise papa.

[ceo_energemsier + 1,818]

Aging, thin pipe likely cause of Philadelphia refinery fire

 

 

https://apnews.com/cd3e8d609cf345d69b5f0c971c3d07b6