BP to exit Texas City as it halves US refining capacity
1 Feb 2011
London – BP is to halve its US refining capacity by selling its Texas City and Carson refineries. The sales, which are part of repositioning of the trouble-prone group’s US refining and marketing (R&M) business, are scheduled to be completed by the end of 2012.
The UK group, it wants to focus US downstream investment on further improving and upgrading its other, “more advantaged” R&M networks – based around the Whiting, Indiana and Cherry Point, Washington refineries and its 50% interest in the Toledo, Ohio refinery.
“These refineries have greater flexibility to refine a range of crude oils including heavy grades, and on average are more diesel-capable than BP’s current portfolio. They are also well-integrated with BP’s marketing operations and benefit from advantaged and focused logistics infrastructure,” said BP.
BP intends to sell both the Texas City refinery and the Carson refinery, near Los Angeles, with its marketing network as going concerns and expects significant market interest in the assets.
The planned sales will be subject to regulatory and other approvals, and BP said it will ensure that all current regulatory obligations associated with Texas City are reflected in any transaction.
“The moves we have announced today will give BP a smaller, but well-positioned and very competitive portfolio of refining and marketing businesses,” said Iain Conn, BP chief executive refining and marketing. “I have no doubt that the businesses we are seeking to divest will prove extremely attractive to other operators.”
The Carson refinery has 265,000 barrels per day (bpd) refining capacity and supplies some 25% of Los Angeles gasoline demand, became part of BP through the 2000 acquisition of ARCO. It employs some 1200 staff and 500 contractors.
BP also want to divest its interests in a cogeneration plant on the Carson refinery site, crude and product terminals and also its marketing interests.
The Texas City refinery became part of BP with the 1998 merger with Amoco and was the scene of a multi-fatality accident in March 2005 – the first in a run of serious incidents culminating in the Deepwater Horizon disaster last year in the Gulf of Mexico.
With 475,000 bpd refining capacity, the Texas site is third biggest refinery in the US, with gasoline manufacturing capability equivalent to approximately 3% of US production. It employs some 2,200 BP staff and, contractor numbers can vary between 2000 and 4000 each day.
During the last few years, over $1 billion has been invested in modernising and improving the plant. However, Texas City lacks strong integration into any BP marketing assets, the group said.
Assets to be divested associated with the sale of Texas City also include the cogeneration plant. BP intends to retain the Texas City Chemicals complex adjoining the refinery.
US investments
BP is currently carrying out a number of major investments in its other US refineries, including a large investment programme to transform its 405,000 bpd capacity Whiting refinery, significantly increasing its capability to process heavy Canadian crude; a clean diesel upgrading project at its 240,000 bpd Cherry Point refinery and the addition of a continuous catalytic reformer to its 160,000 bpd capacity Toledo refinery (a 50:50 joint venture with its partner Husky Energy Inc).
