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February 2011

Vol. 16, No. 6 Week of February 06, 2011

BP’s Carson refinery one of 2 to be sold

Facility near Los Angeles is major processor of Alaska North Slope crude oil; Washington’s Cherry Point refinery also uses ANS crude

Wesley Loy

For Petroleum News

A major destination for Alaska North Slope crude oil — BP’s Carson refinery near Los Angeles — is going on the sale block.

BP announced Feb. 1 it would sell the Carson refinery along with its troublesome Texas City refinery as part of a continuing campaign to divest up to $30 billion in assets to cope with the Deepwater Horizon disaster.

The London-based company said it aims to complete the refinery sales by the end of 2012, reducing its U.S. refining capacity by half. BP said it “expects significant market interest” in the large refineries.

The sale of the two plants “will make BP the smallest refiner among its international competitors,” the company said.

But it emphasized it still will have a stable of “higher quality refineries and related marketing networks,” and that it plans refinery upgrades.

BP’s other refinery assets include the Cherry Point, Wash., refinery, which also takes major deliveries of North Slope crude; the Whiting, Ind., refinery; and a 50 percent 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,” the company said. “They are also well-integrated with BP’s marketing operations.”

Carson refinery specs

BP picked up the Carson refinery through the ARCO acquisition in 2000.

Located on 630 acres near the Long Beach and Los Angeles harbors, the Carson refinery “is at the heart of an integrated fuels value chain stretching across southern California, Arizona and Nevada,” BP said.

It supplies 25 percent of Los Angeles gasoline demand and 50 percent of the jet fuel at the LAX airport, a BP fact sheet on the Carson refinery says. The plant employs about 1,200 people.

Carson processes 265,000 barrels of crude oil per day, including Alaska North Slope, Middle East and West Africa crudes. Alaska crude accounts for about 70 percent of the refinery’s intake.

Tankers load North Slope crude at the terminus of the trans-Alaska pipeline at Valdez and haul it south through the Pacific for delivery almost exclusively to West Coast refineries.

“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 and also its marketing interests,” BP said. “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.”

Texas City refinery

BP acquired the Texas City refinery in the 1998 merger with Amoco.

It has been a troublesome property for BP, the scene of a 2005 explosion that killed 15 workers.

Located south of Houston near Galveston Island, Texas City is the third largest U.S. refinery, producing 3 percent of the nation’s gasoline supply. It runs 475,000 barrels of crude per day, and in 2009 processed 54 different types of crude from all over the world, a fact sheet says.

“During the last few years, over $1 billion has been invested in modernizing and improving the plant,” BP said. “However, Texas City lacks strong integration into any BP marketing assets.”

BP revealed its intent to sell the refineries on the same day it announced the resumption of quarterly dividend payments to shareholders, drawing the ire of some Gulf of Mexico residents who said they’re still hurting economically from the Deepwater Horizon spill. BP said it would pay a dividend of 7 cents a share for the fourth quarter of 2010.

Chief Executive Bob Dudley called BP “a company in transition” as a result of the oil spill, and that 2011 will be a year of “recovery and consolidation.”

“BP remains on track to meet its target of up to $30 billion of divestments by the end of 2011, having concluded agreements for divestments totaling around $22 billion by the end of 2010,” a company press release said.

The release noted the divestment program has not included any of BP’s inventory of future major upstream projects.






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