Efforts by concerned business leaders, workers, and federal and state officials over the past several months have in part resulted in improved prospects for three southeastern Pennsylvania refineries. Sunoco announced last year that it would close its Marcus Hook, PA refinery by the end of 2011, and then its large Philadelphia refinery by July 2012 if a buyer was not found. Shortly thereafter, Conoco-Phillips announced plans to close its Trainer, PA refinery. Since that time the potential for continued operation of the three refineries has improved.
According to a US Department of Energy report released in February 2012, these three refineries represented 50% of total east coast refining capacity in August 2011. There was concern that their closure would lead to large declines in the supplies of refined products such as fuel oil, diesel fuel, and gasoline, followed by price spikes.
PBF’s Delaware City, DE refinery, which was closed by Valero in 2009, reopened in November 2011. Delta Airlines announced in April 2012 that its subsidiary Monroe Energy would purchase Conoco’s Trainer refinery and begin producing jet fuel, gasoline and diesel there in fall of 2012. In June 2012, Sunoco announced that the Carlyle Group, a private equity firm, would purchase its Philadelphia refinery and expand its operating capacity.
Pennsylvania Governor Tom Corbett unveiled a state-subsidized deal last week to save jobs in the oil and petrochemical industry by providing $15 million to support Braskem America Inc.’s takeover of a portion of Sunoco’s Marcus Hook refinery. Here, Braskem will produce polypropylene, a key ingredient used in the production of many types of plastic products.
The remaining uncertainty is over the future use of the part of Sunoco’s Marcus Hook refinery not acquired by Braskem. A recent evaluation of the facility performed by IHS Global Insight released in late June recommends that it be reconfigured as a multi-purpose energy and industrial park. The study found that the three uses with the highest market potential are shale-based dehydrogenation to produce propylene; natural gas liquids processing; and as a storage terminal for refined petroleum products.
The Delaware River has long been one of the major crude oil import centers in the US, with the incoming oil serving as the feed stock for the region’s large chemical manufacturing sector. As recently as 2009, there were 6 operating oil refineries along the river, so the prospect of the imminent closure of three of them would have significant, negative effects on the regional economy. If all three refinery initiatives move along successfully, the number of retained and restored jobs could return close to the level it was before 2009.