Sunoco, exiting oil refining, puts last two plants on block

Sunoco Inc., Philadelphia, hopes to sell its remaining two refineries and plans to leave the oil refining business to complete what it calls “a fundamental shift away from manufacturing.”

The company has retained Credit Suisse Securities (USA) LLC to help it review strategy.

It will try to sell its 330,000-b/cd refinery in Philadelphia and 175,000-b/cd facility at Marcus Hook, Pa. If unsuccessful, it will idle the main processing units in July 2012.

Key processing capacities at Philadelphia are 113,500 b/cd of fluid catalytic cracking, 68,000 b/d of catalytic reforming, 85,600 b/cd of catalytic hydrotreating for pretreatment of reformer feeds, and 78,000 b/cd of cat hydrotreating for diesel desulfurization. The Philadelphia refinery also has 16,700 b/d of alkylation (hydrofluoric acid) capacity.

The Marcus Hook refinery has capacities of 93,000 b/cd for FCC, 15,600 b/cd for cat reforming, 36,000 b/cd of cat hydrotreating for reformer feed, and 12,000 b/cd of posthydotreating for FCC naphtha. It has 10,000 b/d of alkylation (sulfuric acid) capacity.

Restructuring

Sunoco has been restructuring for several years. Earlier this year it completed the sale of its 170,000 b/d refinery in Toledo, Ohio, to Toledo Refining Co. LLC, a unit of PBF Holding Co. LLC (OGJ Online, Mar. 1, 2011).

In 2010 it shut a 150,000 b/d refinery at Eagle Point, NJ, and sold an 85,000-b/d refinery in Tulsa to Holly Corp. (OGJ Online, June 16, 2010).

It also sold its polypropylene business, Sunoco Chemicals Inc., to Braskem SA, and shut down a PP plant in Texas (OGJ Online, Apr. 6, 2010). And it is separating its metallurgical coke business through an initial public offering of shares in SunCoke Energy.

The company expects to incur pretax noncash charges of $1.9-2.2 billion in the third quarter as it exits refining. The charges relate to impairment of plant and equipment. If it must idle process units, it expects additional pretax charges of as much as $500 million related to contract terminations, staffing costs, and severance.

Sunoco has been expanding its remaining business units, retail marketing and logistics.

The company has more than 4,900 branded retail locations in 24 states, with APlus convenience stores operated by it or dealers in 600 of the retail outlets.

It also holds 35% interest in and is general partner of Sunoco Logistics Partners LP, a publicly traded master limited partnership that operates 3,350 miles of crude oil trunkline, 500 miles of crude oil gathering lines, and 2,500 miles of oil product pipelines.