Phillips 66 looks to unload Alliance refinery amid pandemic drag
Houston oil refiner Phillips 66 said Thursday that it is seeking a buyer for its Alliance refinery in Belle Chasse, La.
The company did not disclose an asking price for the plant, which can refine 255,000 barrels of crude per day.
The move is in response to market conditions and the evolving energy landscape, the company said. But Alliance has been challenged by its feedstock of slightly or undiscounted crudes, a direct and heavy reliance on pipeline sales, and the occasional hurricane.
Phillips 66 idled the unit from the third quarter of 2020 to the first quarter of 2021 because of planned turnarounds, the effects of hurricanes and poor margins.
With multiple refining units idled across North America, including Shell’s nearby Convent Refinery, selling Alliance is likely to take time and sell for less than premium value — estimated at $300 million to $800 million — according to Roger Read, a senior analyst at Wells Fargo Securities.
The sale of the unit is unlikely to have an effect on Phillips 66’s overall refining earnings or cash flow, according to Wells Fargo.
Refineries took a hit during the pandemic as the travel industry was devastated and demand for fuel plummeted.
While demand for gasoline and diesel fuel has returned to pre-pandemic levels, global aviation restrictions caused by the pandemic continue to slow the return of jet fuel demand.
Several refinery closures amid the pandemic decreased U.S. refinery capacity by 4.5 percent to a total of 18.1 million barrels per day at the start of 2021, according to the Energy Department.