Biggest East Coast refinery to close, driving up fuel prices
The biggest refinery on the East Coast will shut down, after a massive explosion and fire crippled operations at a site that has helped fuel the region for 153 years.
The Philadelphia Energy Solutions complex on the banks of the Schuylkill and Delaware Rivers in Pennsylvania has been in place since 1866, a year after the Civil War ended. It emerged from bankruptcy just 10 months prior to two fires in June that closed down key gasoline-making units just as the summer driving season gears up.
Philadelphia Mayor Jim Kenney said Wednesday the refinery will close within the next month. The complex processes 335,000 barrels of crude a day, meeting about percent of gasoline demand in a densely populated region.
The refinery will dismiss half of its 640 union workers and 130 salaried employees Wednesday, said a person familiar with the plans.
The company will close the refinery in a month, Kenney said in an interview. “I assume they will try to find a buyer.”
Philadelphia Energy Solutions confirmed in a statement that it’s shutting the site, saying the fire made it impossible to continue operations, and “will position the refinery complex for a sale and restart.” It filed a notice with the state that it will dismiss 1,024 workers at the refinery and rail yard, effective July 1.
On Monday, the United Steelworkers union said any decision to shut the complex would have lasting consequences “starting with almost 2,000 workers directly employed by PES and tens of thousands more whose employment depends on the refinery to some degree,” according to a statement by USW International Vice President Tom Conway.
The refinery was beset by two fires, on June 10 and June 21. The most recent, affecting an alkylation unit used to make highoctane gasoline, was triggered by an explosion in the complex’s Girard Point section that could be seen miles away and was picked up by weather satellites. The earlier blaze was at a fluid catalytic cracker in the Point Breeze section of the refinery.
Gulf Coast opportunity
The plant is the biggest of five refineries in the Northeast. It’s faced threats before. In 2012, with supply outpacing demand, it took a change of ownership and a push by lawmakers and unions to keep it operating.
The loss of the refinery will likely increase the region’s dependence on supplies from Canada, Europe and the Gulf Coast, potentially boosting prices for drivers and profit margins for the remaining plants in the area.
“The U.S. Gulf Coast will remain a key supplier of refined products with supplemental gasoline imports from Europe likely needed to replenish lost production from the facility,” Marc Amons, senior research analyst, North America refining at Wood Mackenzie, said in an emailed statement.
East Coast refiners aren’t on the receiving end of crude pipelines from America’s oil shale riches in Texas and North Dakota. So the only way they can get hold of U.S. crude is by train or U.S.-flagged tankers, which are much more expensive. The result: Philadelphia-area fuel makers still import crude from West Africa and the North Sea.