BP says it plans to focus future downstream investment in the U.S. on further improving and upgrading its more advantaged refining and marketing networks in the country.
BP is repositioning its refining and marketing (R&M) business in the U.S. and divesting two of its US refineries, in a move that will halve BP’s U.S. refining capacity, The Financial reported.
On Feb. 1, BP announced it plans to find buyers for its Texas City, Texas refinery and the Carson refinery near Los Angeles, together with its associated integrated marketing business in southern California, Arizona and Nevada. As part of this sale, BP expects to divest the ARCO brand (though retaining brand rights for northern California, Oregon and Washington) and to retain ownership of and license the ampm brand. Subject to regulatory and other approvals, BP plans to complete the sales by the end of 2012.
“BP plans to focus future downstream investment in the U.S. on further improving and upgrading its other, more advantaged R&M networks in the country—based around the Whiting, Indiana and Cherry Point, Wash., 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,” BP was quoted as saying.
BP plans to sell both the Texas City refinery and the Carson refinery with its marketing network as going concerns and expects significant market interest in the assets.
“The U.S. remains a very important market for BP’s fuels, lubricants and petrochemicals businesses and 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 told The Financial. “I have no doubt that the businesses we are seeking to divest will prove extremely attractive to other operators.”
The Carson refinery, south of Los Angeles, is at the heart of an integrated fuels value chain stretching across southern California, Arizona and Nevada. The refinery, which 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 1,200 staff and 500 contractors.
The assets associated with the Carson refinery also to be divested include BP’s interests in a cogeneration plant on the refinery site, crude and product terminals in addition to its marketing interests.
The Texas City refinery became part of BP with the 1998 merger with Amoco. The highly complex refinery offers 475,000 bpd refining capacity as the third biggest refinery in the U.S., and has gasoline manufacturing capability equivalent to about 3% of U.S. production. The refinery employs some 2,200 BP staff and, contractor numbers can vary between 2,000 and 4,000 each day.
During the last few years, more than $1 billion has been invested in modernizing and improving the plant. But, Texas City reportedly lacks strong integration into any BP marketing assets. The 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, The Financial noted.
BP currently is in the process of a number of major investments in its other U.S. refineries, including a large investment program 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).