Sunoco Idles Eagle Point Refinery; Will Evaluate Feasibility of Using it to Produce Alternative Fuels in the Future
09 October 2009
Sunoco, Inc. is indefinitely idling all process units at its Eagle Point refinery located in Westville, New Jersey in an effort to reduce losses in its refining business at a time when a recessionary economy, weak demand for refined products, and increased global refining capacity have created margin pressure on the entire refining industry.
Sunoco owns and operates four refineries, including Eagle Point, with a combined crude oil processing capacity of 825,000 barrels per day. Sunoco purchased the Eagle Point Refinery in January 2004 from El Paso Corporation. The acquisition increased Sunoco’s total refinery processing capacity by 20%.
Sunoco will shift current Eagle Point production to its two nearby refineries in Marcus Hook and Philadelphia, Pennsylvania, which will now operate at higher capacity utilization. The company will be able to produce essentially the same amount of refined products in two facilities that it currently produces in three while continuing to meet customer demand.
The company intends to idle Eagle Point until market conditions improve and will evaluate this decision and other options on an ongoing basis, including the feasibility of using the facility to produce alternative fuels in the future. Idling Eagle Point, the most recent addition to Sunoco’s refining system, minimizes disruption to the rest of the company’s operations, the company said.
While Marcus Hook and Philadelphia serve as distribution hubs that feed refined products directly into Sunoco’s branded retail network, Eagle Point is not as directly linked. Although the production units at Eagle Point will be idled, refined product storage and handling operations will continue. The products rack at Eagle Point owned by Sunoco Logistics Partners L.P. will remain open.
I can remember 10 years ago the refineries were running at more than 90% capacity and if one went down, areas were put in a squeeze. Oil companies testified in Congress that they had no intention of building any refineries and in fact they were selling them to others outside of big oil, it was not a very profitable area to be in.
Posted by: SJC | 09 October 2009 at 08:58 AM
I remember less than 5 years ago when gas prices were going through the roof and any little disruption, like refinery fire or pipeline issue, was affecting prices. The stock of refiners like Tesoro & Valero was doing really well during that time (no surprise).
What could they possibly do with such a massive fixed asset - a major investment? It would cost a lot of money to convert it into a different kind of refining facility. Petroleum products are on the way out, but there is no clear winner yet in the renewable world. I bet Sunoco tries to get rid of it completely after it sits idle for a year or two...sells it dirt cheap at a loss but not quite a total write-off. Maybe they could keep it and do something related to LNG.
Posted by: ejj | 09 October 2009 at 06:34 PM