PhillyInc: ConocoPhillips will shed its oil refinery in Trainer

Shutting the ConocoPhillips refinery in Trainer would continue a grim time for area refining.
Shutting the ConocoPhillips refinery in Trainer would continue a grim time for area refining.
Posted: September 28, 2011

By next summer, Philadelphia could switch from being the center of the East Coast's oil-refining industry to a historical footnote.

ConocoPhillips' announcement Tuesday that it plans to sell or shut down its Trainer, Delaware County, refinery was expected, especially after Sunoco Inc. announced a similar decision three weeks earlier.

But that does not lessen the impact of the potential loss of 410 jobs at the 91-year-old refinery that ConocoPhillips has owned since 2002, when Conoco Inc. acquired Phillips Petroleum Co.

The shutdown has already begun. Spokesman Rich Johnson said that by the end of the week the Trainer refinery would no longer process crude oil. All employees will work through the end of the year, he said.

Add the ConocoPhillips workers to the 1,450 full-timers and 425 contractors that could lose their livelihoods should Sunoco simply idle its South Philadelphia and Marcus Hook refineries come July, and one can see how cruel September has been for the region's energy sector.

Consider that as of October 2009, there were eight refineries with a total production capacity of 1.26 million barrels per day in the Philadelphia region, more than half the refinery capacity of the East Coast.

 Now, "For sale" signs have been hung on refineries that account for 63 percent of the remaining production capacity here. And Sunoco and ConocoPhillips are trying to sell at a time when other oil companies are trying to shed their own refineries as gasoline demand is flat in the United States.

  Willie Chiang, ConocoPhillips' senior vice president of refining, marketing, transportation, and commercial, said in a statement that "the decision to sell is based on the level of investment required to remain competitive."

Houston-based ConocoPhillips, which announced plans in July to split into two companies, has been evaluating all its refineries over the last few years with an eye toward reducing its refining capacity.

Chiang said the East Coast refining market had been under "severe market pressure for several years" from product imports, weak demand for motor fuels, and costly regulatory requirements.

Johnson, the ConocoPhil-

lips spokesman, emphasized that the company intended to "redeploy" workers to other jobs.

"Our employees have done a great job at Trainer, and we appreciate their efforts in ensuring the safe and reliable operation of the refinery," he said.

Although rumored for two years, the news still came as a "bit of a slap in the face," said Denis J. Stephano, president of United Steelworkers Local 10-234, which represents workers at Trainer under a contract that expires Jan. 31.

 Rep. Pat Meehan (R., Pa.), whose district includes the Trainer and Marcus Hook refineries, said he was greatly concerned by the potential impact of three refinery closings on workers and their families.

"I appreciate the business challenges" faced by ConocoPhillips and Sunoco, said Meehan, adding that he has talked with executives from both companies. The focus now, he said, must be on helping the region market the refineries to potential buyers.

"That's what we need to shoot for first," Meehan said. "We need to make the argument that these can be viable and competitive" refineries.

Started by Sinclair Refining Co. in 1920, the 343-acre Trainer refinery has been closed at least once before. BP Oil, which had acquired the complex in 1969, shut it in 1996 while selling the refinery to Tosco Corp. for $235 million. After spending $60 million on upgrades, Tosco reopened Trainer in 1997.

Meehan and others point to the turnaround that came after Valero Energy Corp. shuttered its Delaware City refinery in November 2009. PBF Energy Co. L.L.C., of Greenwich, Conn., bought the 182,000-barrel-per-day refinery from Valero for $220 million in April 2010. PBF president Michael Gayda said Delaware City had been fully operational since July and had about 500 full-time employees and 200 contractors on any given day at the site.

 One difference now is that the challenge is greater because it involves three refineries requiring hefty investment. Much more than two of the biggest names in the U.S. oil business are willing to spend.


PhillyInc:

Read about Sunoco Inc.'s announcement that it wants to sell or close its two Philadelphia-area refineries

at www.philly.com/sunoco.


Contact columnist Mike Armstrong at 215-854-2980 or marmstrong@phillynews.com,

or @PhillyInc on Twitter.

Read his blog, "PhillyInc,"

at www.phillyinc.biz.

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