PES Refinery Update

By: Jon Babyak / July 10, 2019

Philadelphia Energy Solutions (PES) announced the closing of their doors a couple of weeks ago, but there was, and still is, a lot of uncertainty for what that means for the future of the union workers and the physical plant itself.  PES recently announced its commitment to extend pay for union workers through August 25th, according to StateImpact Pennsylvania.  U.S. Senator Bob Casey and PES representatives have confirmed that PES will pay its workers through the expiration of their collective-bargaining agreement.  While the unions are holding on to hope that parts of the refinery will remain open or sell to a new operator quickly, it seems increasingly unlikely that will happen.

PES was facing significant challenges well before the explosion took place on June 21st that will make it difficult to find a buyer.  In 2018, PES filed Chapter 11 bankruptcy, blaming the “Renewable Fuel Standard” that requires merchant refiners who do not blend ethanol to buy credits on the open market (Susan Philips, WHYY).  PES was also struggling in part because of the type of crude that they refined; sweet and light.  Regional competitors that can refine heavy, sour crude have a margin opportunity advantage by taking the heaviest parts of the barrel and turning it into high profit fuels such as jet and diesel, according to Tom Kloza from Oil Price Information Service.  PES had less of a competitive edge given the type of equipment the refinery uses, and that will add to the difficulty it is facing while trying to find a buyer.  Any new buyer will also have to take on millions of dollars in environmental cleanup, making the task even more daunting.  PES has a history or dealing with various environmental issues, and this only exacerbates the problems.   

While anything can happen over the next few weeks and months, PES will continue to face significant challenges in finding a new buyer to take on the recovery project and keep more than 1,000 workers employed.  All parties involved hope to find a solution as soon as possible, but this will most likely take a while to resolve, if it ever happens.

 

https://stateimpact.npr.org/pennsylvania/2019/07/08/philadelphia-energy-solutions-extends-pay-for-refinery-workers/

https://whyy.org/articles/analysts-say-philadelphia-refinery-shut-down-after-fire-unlikely-to-find-a-willing-buyer/

https://stateimpact.npr.org/pennsylvania/2018/01/22/philadelphia-energy-solutions-files-chapter-11-citing-renewable-fuels-program/

http://blog.guttmanenergy.com/pes-refinery-closes


Categories: crude oil, oil refiners, refinery, PES


Jon Babyak

Written by

Jon Babyak


Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED "AS IS," WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.


Comments

Subscribe to our blog

Price Feed

Stay up-to-date on current fuel prices and market trends with our NYMEX price feed (15 minute delay to the live market).

© 2018 Market data provided and hosted by Barchart Market Data Solutions. Fundamental company data provided by Morningstar and Zacks Investment Research. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer.

Categories

Contact Us