California's tough refining operations have claimed another victim.
Pacific Refining Co., Long Beach, will halt processing at its 50,000 b/d Hercules, Calif., refinery and shut down its related subsidiary Western Fuel Oil Co. within 60 days.
The Hercules site will continue limited operations as a product distribution terminal, including rack sales of transportation fuels, marine bunkering, and asphalt blending and sales. Process equipment will be mothballed indefinitely.
Pacific pledged to meet all supply commitments and help customers find other supplies where needed.
A number of small refineries in California have been shuttered in recent years after trying to survive in the biggest-and perhaps the most competitive-products market in the U.S. The state's refining industry is beset by a regulatory regime that is among the world's toughest.
Among the most recent California refinery closures were Chemoil Refining Corp.'s 21,700 b/d plant at Signal Hill in February 1994; Conoco Inc., 9,500 b/d Santa Maria plant, December 1993; and Fletcher Oil & Refining Co., 29,700 b/d Carson plant, October 1992.
A TOUGH MARKET
Joseph Sparano, chief executive officer of Pacific Refining and Western Fuel, spelled out some of the refining industry's problems in California.
He said, "Operating as a small, independent refinery in California has been very difficult, especially considering the extremely competitive nature of petroleum products markets in the state, poor refining economics that have plagued California based refiners, and investments needed to comply with new state and federal regulations.
"After sustaining losses, the partners who own Pacific and Western Fuel Oil have decided that continuing process operations and further investment in these companies would not produce acceptable financial returns."
Pacific Refining and Western Fuel are part of a venture operated by units of Coastal Corp. and China's state owned Sinochem.
Pacific Refining said the decision to suspend operations was especially difficult because it also will mean shelving a 5 year effort to obtain regulatory approvals to modify the refinery to produce reformulated "clean fuels" required under state and federal law.
Despite those efforts, the economic obstacles of operating the refinery proved insurmountable, Sparano said.
More than 200 employees will lose their jobs: about 142 at the Hercules refinery, 38 at Long Beach, and 23 at Western Fuel's San Pedro terminal.
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