The Carlyle Group Buys Sunoco’s Philadelphia Refinery

“We believe the changing nature of the energy paradigm in the U.S., coupled with a redefined operating model, can truly benefit this refinery,” says Carlyle managing director.

Sunoco Inc.’s Philadelphia refinery, which was facing potential closure at the end of July, has been saved by The Carlyle Group. The Washington-based private-equity manager announced plans Monday to operate the refinery with Sunoco as a joint venture called Philadelphia Energy Solutions.

The move is expected to save 850 jobs at the refinery, the largest fuel-production plant in the northeastern U.S., increase jobs if plans to expand production are realized, according to the Philadelphia Inquirer.

Carlyle officials plan to “reimage” the business to exploit new, cheaper domestic sources of crude oil to replace expensive imported petroleum, which was cited as a major reason the refinery was uncompetitive.

In September, Sunoco announced its plans to exit refining and to sell or shut down the plant this summer, noting it was losing a million dollars pre day on fuel production. The U.S. Energy Department warned that shutting the refinery could lead to spot shortages of fuels and spikes in price. Pennsylvania estimated that the plant supports 10,000 jobs indirectly. The site, originally two refineries merged into one, occupies more than two square miles of South Philadelphia, the Philadelphia Inquirer reported.

Carlyle plans to greatly increase the use of low-priced natural gas from Pennsylvania’s booming Marcellus Shale region to reduce refining costs and emissions. “We believe the changing nature of the energy paradigm in the U.S., coupled with a redefined operating model, can truly benefit this refinery,” Carlyle managing director Rodney Cohen said. Immediate upgrades at the 330,000-barrel-per-day refinery will require more than $200 million of new capital, he said, declining to disclose the extent of Carlyle’s investment.

 

 

 

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