July 1, 2012:

Not too long ago, oil refineries appeared to be falling like dominoes. Valero had planned to shut down its refinery in Delaware City. And last year, Sunoco, owner of refineries in Marcus Hook, Pa., and Philadelphia, was among firms announcing plans to close them, saying losses were too heavy. But today, some of the same forces that are driving gas prices down are brightening prospects for the U.S. refining business as a whole, observers say. Embattled refineries on the East Coast, especially in this area, now are seeing prospects for second lives. But, without some of the advantages of refineries in other areas of the country, observers say there are some special circumstances at work.  As for the overall industry, “the fundamentals have changed a little bit,” said Phil Flynn, an energy analyst for the Price Futures Group. Crude oil prices have dipped, which has allowed refineries to make a larger profit amid rising demand for their products in places like Central and South America. And crude from new middle American sources like North Dakota and Canada is making its way to Gulf Coast refineries, giving them a healthier profit margin.

A general deescalation of political pressure surrounding Iran, and indications that Western countries are more prepared to release strategic oil reserves if Iran does act aggressively, have driven global crude prices lower, said Beth Heinsohn, senior news editor at Oil Price Information Service. Some refineries in this region closed amid tough market pressure, with customers using fewer refined products, like gasoline and heating oil. East Coast refineries generally get their crude by sea from West Africa, and this crude still tends to cost more.

Because there were so many refinery closures at the end of last year, “it strengthened the positions of all the refineries who held on,” said Chris Lafakis, an economist at Moody’s Analytics. East Coast refineries, approaching permanent closure, have been sold for low prices to companies willing to take a chance, reports McQuilling Partners, Inc., a marine services company.  And the state money that helped save Delaware City – the jobs argument – is providing one more route for keeping refineries alive, Heinsohn said. Heinsohn noted that Valero CEO Bill Klesse recently told equity analysts that difficult economic times have made saving refinery jobs a message that is getting through, creating a way to save a refinery that would otherwise be closed.

“The way the refineries were saved from the scrapheap appears to have made more of an impression on refining companies than the way their production is contributing to or will contribute to Northeast fuel supply,” Heinsohn said. PBF bought the refinery in Delaware City in 2010 for the low price of $220 million, several months after Valero had shut it down. Valero had planned to raze the property after sustaining large losses on the operation of the refinery. Gov. Jack Markell pledged $45 million in state financial assistance, leading to $465 million in renovations to the plant. About 500 jobs were restored.

PBF now hopes to build an additional, $1 billion, 70,000-barrel-per-day “ultra-low sulfur” refining unit at Delaware City. Hundreds of idled workers may soon be back at work at the 185,000-barrel-per-day refinery in Trainer, Pa. which has been owned by ConocoPhillips. That company closed the plant in September. Delta announced last month that it would acquire the refinery to supply its jet fuel. The Carlyle Group and Sunoco Inc. are reportedly close to a deal that would have Carlyle acquire Sunoco’s Philadelphia refinery. The refinery, which produces 335,000 barrels a day, is one of the largest on the East Coast. Sunoco said it would close the refinery by the end of the summer if it did not find a buyer.

Local officials are holding out hope that such trends lead to a new use for the Marcus Hook facility, although few expect it to be as a refinery. It could be used as a liquefied natural gas export facility or gas-fired power station, according to a report commissioned by the Delaware County Industrial Development Authority. Lafakis pointed to numbers that he said demonstrate the overall better health of this country’s refining industry. Refineries were making an average margin of $6.44 per barrel early this year. Last week, that number was $18.67, Lafakis notes. “Refineries are clearly a lot more profitable today than they were at the beginning of the year,” Lafakis said.

By delawareonline.com

July 1, 2012:

When you fill up at the gas station, do you ever wonder where the gasoline comes from? Saudi Arabia, Venezuela, California?  You probably don't care, being outraged about the price on the pump. But you should. Most of the fuel we use in Alaska, whether gasoline, diesel or jet fuel, comes from here. We produce it, refine it and pump it. Some of the fuel used in Western Alaska comes from Asia. In Southeast Alaska much of it comes from the Pacific Northwest. But our Alaska refineries do supply both those markets with some of their needs and that's the important thing. We have the capability.

We're not happy about the price but we are blessed with the security of being able to supply our own needs. We're not at the end of a long fuel transportation line from Washington or California, as we once were. I think we should have that concern about our food supply but that's a topic for another day. We need to be worried about our refineries, however. In Fairbanks, Flint Hills Resources, which operates a refinery at North Pole east of the city, is closing down its second crude oil processing unit this summer. A third unit was taken out of commission two years ago. That leaves only one unit.  The reason for the shutdowns is that Flint Hills is finding it difficult to compete with fuel importers who can bring foreign jet fuel into Anchorage cheaper than the refinery can make it in Fairbanks and move it to Anchorage, which it has previously done.

We should care that our in-state manufacturers are being displaced by foreign manufacturers and Alaskans being put out of work but I haven't heard much from Alaska politicians on this. I know free markets should be left unfettered but I think the state, at least, shouldn't do things to make things worse for our local guys. In this case, the state should look seriously at whether to continue to charge a premium -- a profit, so to speak -- on state royalty crude oil sold to Flint Hills. The refinery depends on a contract to buy state-owned royalty oil for its plant. This contract is up for renewal soon and I would encourage state officials to reconsider the premium on oil sold to Flint Hills.

A side note: The state gets a one-eighth royalty on all oil and gas production from state lands. It has the option of taking the oil in "value," or in cash, or "in kind," the physical oil or gas. The state has usually chosen to take most of its oil royalty in kind for a variety of reasons but a big one is to have oil available for independent refiners to encourage them to supply Alaskans with fuel. Fairbanks community leaders are worried about the Flint Hills refinery and the closing of its processing units. The security of fuel supplies is important to the community and to the military bases in Interior Alaska. Interior villages should be concerned too, because most of their heating oil comes from Flint Hills.

By adn.com

June 29, 2012:

They lobbied politicians — locally, statewide and nationally. They held rallies. They researched industry trends. They talked financial strategies, wooed businesses and wrote thousands of letters. Most important, they united to craft a persuasive message that resonated with people who may have otherwise had no interest in the fate of three nearly shuttered oil refineries along the Delaware River and the thousands of people who worked in them. And, in the end, they may have helped save many of their own jobs, plus many other jobs in the Southwest Philadelphia and Delaware County. That's why five labor union locals involved with the Sunoco and ConocoPhillips refineries were among the honorees at Thursday's annual awards banquet held by the Bread & Roses Community Fund, a Philadelphia foundation that bankrolls organizations advocating for workers and community groups.

"It's absolutely inspiring," said Casey Cook, executive director of the fund. "It's really an incredible story." Last Friday, Delta Air Lines finalized its purchase of the ConocoPhillips refinery in Trainer, with plans to hire 400. There is a potential buyer for Sunoco's refinery in Southwest Philadelphia, employing 1,000. Refinery jobs generate other jobs among suppliers and local businesses. It's unlikely that the Sunoco refinery in Marcus Hook will reopen as a refinery. The Bread & Roses Foundation takes its name from the famous Bread and Roses textile strike in Lawrence, Mass., in 1912. The mostly female and immigrant workforce walked off the job and within a week, 22,000 textile workers were on strike.

Cook said the women wanted bread, meaning sustainable wages, and roses, meaning work days and weeks that were short enough to allow the enjoyment of life.  Cook said that because of the 100-year anniversary of the strike, the foundation wanted to specifically honor unions and other advocates for workers. It's important, she said, to emphasize the ties between the social justice movement and organized labor, especially now, she said, "with unions being under attack, being scapegoated and marginalized."

The organization's Paul Robeson Award for Lifetime Achievement was given to Kathy Black, an official with the city's white collar union, the American Federation of State Council and Municipal Employees District Council 47. "She exemplifies the bridge between the larger social justice community and organized labor," Cook said. Black heads the Coalition for Labor Union Women, dedicated to advancing women in union leadership. She is also active in many feminist causes and in the peace movement. Also honored was the Philadelphia Unemployment Project led by John Dodds. Last Friday, after many months of advocacy by this group, Gov. Corbett signed a law that reactivates the Homeowners Emergency Assistance Program, a program that helps people who have lost their jobs or have come on hard times to keep their homes.

"They are the organization that fights for the poorest among us in terms of economic rights," Cook said. Bread and Roses also honored retired Philadelphia AFL-CIO official Janet Ryder for connecting organized labor and the United Way, and Pennsylvania Consumer Workforce Council chairman German L. Parodi for his efforts to include people with disabilities in labor negotiations involving homecare workers. The Philadelphia law firm of Kairys, Rudovsky, Messing and Feinberg L.L.P. earned the "Robin Hood was Right Award" for its pro bono representation of many grassroots groups. The five refinery unions honored were Locals 10-1, 10-234 and 10-901 of the United Steelworkers headed by Jim Savage, Dennis Stefano and David Miller, respectively, as well as Local 13 of the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers led by John Clark and United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry Local 420, a steamfitters local, led by Tom Gallo.

By Philly.com

June 29, 2012:

California-blend gasoline gained against futures after Royal Dutch Shell Plc (RDSA) reported a wet-gas compressor malfunction at a refinery in Northern California. Shell’s 158,000-barrel-a-day Martinez refinery flared sulfur dioxide at 11:09 p.m. local time yesterday after a “wet gas compressor problem,” The Hague-based company said in a filing with the California Emergency Management Agency. Emily Oberton, a Shell spokeswoman in Houston, declined to comment. California-blend gasoline, or Carbob, in San Francisco advanced 2.75 cents to a premium of 9 cents a gallon versus futures traded on the New York Mercantile Exchange at 4:52 p.m. East Coast time, according to data compiled by Bloomberg. The same fuel in Los Angeles also rose 2.75 cents to a 9-cent premium to futures.

Carbob tumbled yesterday after Exxon Mobil Corp. (XOM) and Phillips 66 (PSX) restored operations at their refineries in Southern California following upsets. California-blend, or CARB, diesel in Los Angeles gained 0.75 cent to a premium of 4.5 cents a gallon against Nymex heating oil futures. San Francisco CARB diesel dropped 1.75 cents, to parity with futures. Carbob gasoline inventories rose 5.4 percent last week to 4.8 million barrels from 4.55 million a week earlier, the state Energy Commission said in an e-mailed report yesterday. California-blend, or CARB, diesel supplies dropped 9.4 percent to 2.14 million barrels, the state said. The discount for conventional, 87-octane gasoline in Portland, Oregon, strengthened 1 cent to a 5.5-cents-a-gallon discount to gasoline futures. Low-sulfur diesel in Portland was unchanged at 11.5 cents a gallon over heating oil futures.

Gasoline inventories in the U.S. West Coast, known as the PADD 5 region, slipped 1.1 percent to 27.1 million barrels last week, the Energy Department said yesterday. Low-sulfur diesel supplies in the region climbed 0.4 percent to 10.7 million barrels, the agency said.

By Bloomberg

June 29, 2012:

HARRISBURG, Pa. (AP) — Top state Republican lawmakers have reached an agreement on a package of tax breaks that Gov. Tom Corbett has sought in hopes of encouraging the construction of a multibillion-dollar petrochemical refinery and an associated chemical manufacturing industry in Pennsylvania, lawmakers and legislative aides said Thursday. Under the agreement, there would be no limit on the tax break — Corbett had proposed capping it at $66 million a year, or almost $1.7 billion total. But it would keep the Republican governor's proposal for a tax credit of a nickel per gallon of ethane used by a qualifying refinery owner. The credit would last for 25 years, beginning in 2017, as Corbett had initially proposed. At $1.7 billion, lawmakers say it would be Pennsylvania's largest financial incentive package ever, but the value of the tax credit could actually exceed $66 million a year, or $1.7 billion total.

"At some point in time, it could be" above that, said Sen. Elder Vogel, R-Lawrence, whose district could become home to the new industry. "It won't be to start with." The $66 million limit was an artificial number, Vogel said. But the nickel per gallon figure is more important, because Corbett administration officials say it would be proportional to the industry's activity and the resulting collections of new taxes on things like sales and income. The goal and expectation is to send the legislation to Corbett to sign before the fiscal year ends Saturday night and the Legislature heads home for its traditional two-month summer break from Harrisburg. A draft of the legislation was not available to the public Thursday. The provisions were to be amended into a broader bill on Friday that makes a number of changes to tax laws.

Major business groups and private-sector labor unions support the idea, but some Republicans say the tax breaks are unfair to other business sectors. Some Democrats are criticizing the tax breaks as corporate welfare at a time when Corbett is balancing a second straight budget with cuts in aid to services for the poor. To fight concerns about the appearance of a giveaway to the industry, lawmakers will include requirements that a qualifying refinery owner must invest $1 billion in a project with at least 2,500 construction jobs. Corbett's pursuit of the tax credit was spurred by a tentative commitment from a subsidiary of Netherlands-based oil and gas giant Royal Dutch Shell PLC to build a petrochemical refinery at a site in southwestern Pennsylvania's Beaver County.

Shell's so-called ethane cracker would convert natural gas liquids from the bountiful Marcellus Shale formation to ethylene, which chemical manufacturers can then use to produce chemicals that go into everything from plastics to tires to antifreeze. Shell may have little need for the tax credit because the site of its prospective plant, in Monaca, is located in a tax-free zone the Legislature created for it earlier this year. But the legislation would allow Shell to sell the tax credit to natural gas drillers that produce the ethane or chemical manufacturers that use the ethylene. That way, Shell would deal with one of its biggest concerns — that ethane producers have an incentive to sell to its refinery, rather than pipelining it to other refineries on the Gulf Cost. It also would have help encouraging a chemical manufacturing industry eager to buy the ethylene to cluster around its refinery.

By Bloomberg