This week, Royal Dutch Shell plc announced it reached an agreement to sell its Puget Sound Refinery to HollyFrontier Corp. Accordingly, the purchase valued at $350 million, is the latest major divestment from the European oil giant to moving away from processing crude.
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Shell on moving away from processing crude with US refinery sell to HollyFrontier Corp.
Earlier this week, oil giant shell announced it reached an agreement with HollyFrontier Corp. to sell its Puget Sound Refinery in Washington and Saraland, Alabama. The purchase, valued at $350 million, is the latest major divestment from Shell in its efforts to move away from processing crude.
In fact, HollyFrontier will also pay an estimated $150 million to $180 million for the hydrocarbon inventories at the facility. Besides, the transaction includes on-site co-generation and logistical assets.
Accordingly, HollyFrontier said it expects to fund the takeover with a one-year suspension of its regular quarterly dividend and cash on hand. In this sense, the deal should be closed by the fourth quarter.
“Puget Sound Refinery will complement our existing refining business, with sales into premium product markets and advantaged access to Canadian crude,” HollyFrontier chief executive officer Mike Jennings said in the statement.
Moreover, “this is another step towards reshaping our refining portfolio to drive resilient returns;” said Robin Mooldijk, Shell’s EVP for Manufacturing. In fact, “HollyFrontier is a strong operator, and we believe they will continue the refinery’s legacy of prioritizing safety, environmental performance, and care for people at the site and within the community.”
About the Puget Sound Refinery
Indeed, the Puget Sound Refinery currently processes approximately 149,000 barrels per day of crude oil. Besides, it produces multiple types of gasoline in addition to fuel oil, diesel fuel, propane, jet fuel, butane, and petroleum coke.
Other products of the Puget Sound Refinery are nonene and tetramer, which are chemicals used in various plastic products. Additionally, the current value of the hydrocarbon inventory would range from $150 to $180 million.
As a result of the purchase, HollyFrontier will value the hydrocarbon inventory at closing; based on actual volumes and prevailing market prices. Furthermore, the company will offer employment to all the employees providing that dedicated support to Shell’s Puget Sound Refinery.
This transaction is part of Shell’s move to shrinking its refining portfolio. Indeed, the company is adjusting its holdings to better align with a lower-carbon future. Therefore, the company is focusing on sites that have integrated oil refineries and chemical plants; so, this move shows the company’s bet on the future growth of petrochemicals.
Similarly, in September, the European major said it would retain only six of its downstream facilities. Notably, the company mentioned Norco in Louisiana and Deer Park in Texas, paring back from 14.
Later, the company said in November it was shutting its Convent refinery in south Louisiana. In fact, this decision was a result of the devastating pandemic’s impacts on the fuel industry.
