Refinery

(Last updated: 4:15 p.m.) Sunoco Inc. is being acquired for $5.3 billion by a Texas pipeline company, the latest turn in the dramatic transformation of the iconic 126-year-old Philadelphia oil business. Energy Transfer Partners L.P., a Dallas pipeline company, announced Monday it has entered into a definitive merger agreement to acquire Sunoco for a combination of cash and stock. The buyer will pay about $50.13 a share, or a 29 percent premium above Sunoco's average 20-day closing price.

Now that ConocoPhillips has agreed to sell its Trainer refinery to Delta Air Lines, and Sunoco Inc. is engaged in talks to run its Philadelphia refinery as a joint venture, the immediate fate of only one of the region's endangered refineries remains clouded in uncertainty. Sunoco's Marcus Hook refinery, which company officials say aroused no interest from potential buyers to run as a refinery, is being groomed instead as a potential multipurpose industrial site for storing, handling, and even processing fuel, including by-products from the Marcellus Shale region.

Delta Air Lines, hoping to secure a steady source of discounted jet fuel, announced Monday that it will buy the ConocoPhillips oil refinery in Trainer for the bargain price of $150 million. The nation's second-largest commercial airline says it hopes to reduce its fuel expenses by $300 million a year with the acquisition. Delta spent $11.8 billion on jet fuel in 2011, about 36 percent of its operating expenses. "Acquiring the Trainer refinery is an innovative approach to managing our largest expense," said Richard Anderson, Delta's chief executive officer.

Sunoco Inc. may have found the rescuer for its sprawling South Philadelphia refinery. The Philadelphia company announced Monday that it has entered into exclusive talks with the Carlyle Group, a large private-equity manager with legendary political connections, to run the plant as a joint venture. The refinery, the largest on the East Coast, is Sunoco's last operating fuel-manufacturing plant. Sunoco, which has promised to shut down the 335,000-barrel-per-day refinery this summer if it is unable to find a buyer, would contribute the refinery assets in exchange for a nonoperating minority interest in the joint venture.

Several black men who were contracted to work at the Sunoco refinery in Philadelphia were forced to clean up racial slurs written about them on bathroom walls, the men claim in a federal civil rights lawsuit. Along with racial epithets, the men also claim in the suit filed Wednesday that there were nooses left around the workplace on several occasions. The six plaintiffs, led by Kenneth Hall, 40, of Philadelphia, were all employees of Advanced Speciality Contractors, of Aston, which was contracted to work on a project at the Sunoco refinery on Passyunk Avenue near 61st Street in Southwest Philadelphia, the suit said.

Buried drums of oil waste discovered in August 1986 at the Mobil Oil Corp.' s Paulsboro refinery have not been excavated, and the company and the state Department of Environmental Protection are stalled on beginning cleanup. "We want to clean up the site and the DEP wants us to," said Carole Edwards, spokeswoman for Mobil, "but we want an evenhanded agreement. " Mobil, which employs 900 people and has a daily process capacity of 100,000 barrels of crude oil at the refinery, contends that the administrative consent order for cleanup contains unacceptable legal provisions.

The U.S. Congress Joint Economic Committee announced Tuesday that its hearing this week on refinery closures will be webcast on the committee's website: www.jec.senate.gov . The hearing, which will be chaired by U.S. Sen. Robert Casey (D., Pa.), will focus on the impact that the closing of refineries serving the Northeast will have on fuel markets. Three refineries in Philadelphia are idled or threatened with closure and a fourth refinery in the Virgin Islands also shut down earlier this year.

Chevron Corp. expects to announce the sale of its Philadelphia refinery, the largest of the eight refineries on the Delaware River, by the end of the year. James Galloway, spokesman for the Philadelphia refinery, said yesterday that the company had received a number of "bids which appear to be viable" and was now talking with the parties. The company, based in San Francisco, will not disclose the exact number of bids, the value of them, or the identify of the bidders, Galloway said.

Some former workers at a mothballed refinery in Marcus Hook soon could be back to work. Yesterday, officials with Tosco, the plant's new owners, announced they had reached a tentative agreement with the union. Denis Stephano, president of the Oil, Chemical & Atomic Workers Union Local 8-234 and International, said members would consider the proposed agreement during meetings last night and tonight. A secret ballot vote on the proposed contract is scheduled for Friday evening.

Pollution from refineries along the Schuylkill River - including up to 3.6 million gallons of oil beneath one active refinery site - is far from the only culprit in degrading the groundwater in South Philadelphia. But it's a reasonable suspect, government officials say. "I guess there's at least a smoking gun there," said Charles R. Wood, sub-district chief for the U.S. Geological Survey, after examining maps showing troublesome mineral levels in groundwater between the refinery area and the Philadelphia Naval Base.

At the risk of sounding callous, my first reaction at hearing that Philadelphia's Sunoco refinery might close was excitement. Yes, it would mean job losses, as many as 900 good blue-collar positions, which are all too rare in this city in the first place. Yet all I could think about was the potential. Imagine 1,400 riverfront acres - now given over to hideous distillation towers and storage tanks - cleaned up and converted into something spectacular. Parkland. A second Navy Yard.

Gov. Corbett is hailing it as "an important win for the local community and the people of Pennsylvania. " C. Alan Walker, secretary of the state Department of Community and Economic Development, calls it a "win-win for everybody. " Their effusive praise was for a taxpayer-aided deal that will see Delta Air Lines buy the recently idled ConocoPhillips gasoline refinery in Trainer. In an attempt to battle rising jet-fuel costs, Delta will refine its own at the site, which will supposedly save $300 million a year.

IN THE REGION Delco OKs contract for refinery study The Delaware County Industrial Development Authority on Wednesday announced it had contracted with IHS Global Inc. to study potential uses for the 781-acre Sunoco Inc. Marcus Hook complex. The $100,000 study, which the Delaware County Council has agreed to finance, is expected to be completed in a month. Sunoco shut down its refinery in December, but says it has received no credible offers to operate the site as a refinery.

The Delaware County Industrial Development Authority on Wednesday announced it has contracted with IHS Global Inc. to study potential uses for the 781-acre Sunoco Inc. Marcus Hook complex. The $100,000 study, which the Delaware County Council has agreed to finance, is expected to be completed in a month. Sunoco shut down its refinery in December, but says it has received no credible offers to operate the site as a refinery. IHS Global, an international information company with experts in energy, economics, sustainability and supply-chain management, is based in Colorado and has local offices in Eddystone.

Now that ConocoPhillips has agreed to sell its Trainer refinery to Delta Air Lines, and Sunoco Inc. is engaged in talks to run its Philadelphia refinery as a joint venture, the immediate fate of only one of the region's endangered refineries remains clouded in uncertainty. Sunoco's Marcus Hook refinery, which company officials say aroused no interest from potential buyers to run as a refinery, is being groomed instead as a potential multipurpose industrial site for storing, handling, and even processing fuel, including by-products from the Marcellus Shale region.

"My first reaction was, ‘Wow, they're thinking outside the box.'?" — C. Alan Walker, an aide to Gov. Corbett, on Delta Air Lines' purchase of the ConocoPhillips refinery in Trainer, where the carrier intends to make its own jet fuel. "Acquiring the Trainer refinery is an innovative approach to managing our largest expense. " — Delta chief executive Richard Anderson, on the $150 million purchase. "They're really going to have to prove that they can start to monetize these 900 million users, not just in a desktop environment, but more importantly in a mobile environment, which is even more questionable.

The shaky future of the oil industry in the Philadelphia region took a turn for the better this week, as did the prospects for hundreds of workers whose jobs are linked to oil refineries along the Delaware River. In what proved to be a double-barreled announcement Monday of corporate takeovers, one unlikely savior literally swooped down from the clouds, as Delta Air Lines became the buyer of the ConocoPhillips refinery in Trainer. Given its limited presence at Philadelphia International Airport, Delta's move to lock up a reliable source of discounted jet fuel won't mean lower airfares locally.

Last fall, a Delta Air Lines executive reached out to U.S. Rep. Patrick Meehan in Washington and made an audacious suggestion: The airline, facing relentless increases in fuel prices, was looking to buy the recently idled ConocoPhillips refinery in Trainer to manufacture its own jet fuel. No airline had ever attempted such a strategy. "I thought, this is a real interesting, smart way to address what's going to be a continuing challenge for them," recalled Meehan, a Republican whose district includes the refinery.

Last fall, a Delta Air Lines executive reached out to U.S. Rep. Patrick Meehan in Washington and made an audacious suggestion: The airline, facing relentless increases in fuel prices, was looking to buy the recently idled ConocoPhillips refinery in Trainer to manufacture its own jet fuel. No airline had ever attempted such a strategy. "I thought, this is a real interesting, smart way to address what's going to be a continuing challenge for them," recalled Meehan, a Republican whose district includes the refinery.

Delta Air Lines, hoping to secure a steady source of discounted jet fuel, announced Monday that it will buy the ConocoPhillips oil refinery in Trainer for the bargain price of $150 million. The nation's second-largest commercial airline says it hopes to reduce its fuel expenses by $300 million a year with the acquisition. Delta spent $11.8 billion on jet fuel in 2011, about 36 percent of its operating expenses. "Acquiring the Trainer refinery is an innovative approach to managing our largest expense," said Richard Anderson, Delta's chief executive officer.