Par Pacific Completes Buy of ExxonMobil Refinery

Par Pacific Completes Buy of ExxonMobil Refinery
The divestment includes the Silvertip pipeline and ExxonMobil's 40 percent stake in the Yellowstone pipeline and Yellowstone Energy LP.
Image by wutwhanfoto via iStock

Par Pacific Holdings Inc. has concluded its acquisition of Exxon Mobil Corp.’s refinery in Billings city in Montana state, including logistics infrastructure from the associated ExxonMobil affiliates.

The divestment, announced October 2022, includes the Silvertip pipeline, ExxonMobil’s 40 percent stake in the Yellowstone pipeline and Yellowstone Energy LP, and ExxonMobil’s interests in product terminals in Montana and Washington.

The Billings refinery can produce up to 63,000 oil barrels per day (bpd), processing crude from western Canada and the Rocky Mountain. Storage capacity across the acquired assets totals 4.1 million barrels, according to Par Pacific.

New York-listed Par Pacific paid the base price of $310 million with cash on hand while it used borrowing on the associated hydrocarbon inventory, it said in a press release last week.

“This acquisition significantly enhances our scale and geographic diversification”, Par Pacific chief executive William Pate said in the announcement. “We expect the transaction to be immediately accretive to our earnings and cash flow”.

“The Billings Acquisition enhances the company’s existing Pacific Northwest market position”, Par Pacific said. It already has refineries in Washington and Wyoming, as well as Hawaii.

The Houston city-based energy transporter, refiner and retailer targets to raise the Billings refinery’s throughput and reliability toward capacity.

Par Pacific said it is also “evaluating renewable fuels opportunities to supplement the Billings refinery’s conventional fuel production and utilize its existing market position in Washington to reduce the carbon intensity of its fuel sales in accordance with the recently enacted Washington low-carbon fuel standard”.

The arrangement includes an agreement for Par Pacific to continue supplying about 250 ExxonMobil brand retail stations.

Par Pacific logged 1.491 million bpd in refined product sales volume for the first quarter, when it reported $237.89 million in net income. It had a petroleum refining capacity of 154,000 bpd, storage capacity of nine million barrels, 119 retail locations in the Pacific Northwest and Hawaii, and 179 miles of pipeline as of the period, according to its website.

Fossil Fuel Wind-Down

ExxonMobil’s divestment to Par Pacific is among successive sales involving its fossil fuel business. In a deal expected to close mid-2023, it has transferred its fuel production assets in Italy to local company Italiana Petroli SPA, as announced by its Italian unit December 20. ExxonMobil is also disposing of its 65.99 percent stake in Esso Thailand PCL to Thai company Bangchak Corp. PCL, expected to conclude in the second half of this year, as announced by ExxonMobil January 11. The Thailand transaction involves ExxonMobil distribution terminals and retail stations, as well as its Sriracha Refinery.

ExxonMobil has spared its lubricants and chemicals business in both countries.

The sales come amid similar moves by global energy giants against the backdrop of global clamor for clean energy. The likes of BP PLC and Shell PLC have included refining operations in their decarbonization strategies toward net zero by 2050.

“For most of the Majors, some further divestment of non-core assets is desirable”, Wood Mackenzie analyst Alan Gelder wrote February 13.

“ExxonMobil has a number of refinery-only sites that don’t fit with its long-term strategy. BP is down to six refineries but needs to get rid of at least one more to meet its 2030 goal to reduce refinery capacity. Shell has identified five key petrochemically integrated assets and needs to divest others. TotalEnergies could choose to sell its remaining standalone refineries rather than convert them to bio-sites. And Chevron still owns sites which weaken its strategic focus on downstream decarbonization”.

But a lack of buyers and strong refining profits could slow down such divestments, he said.

To contact the author, email jov.onsat@rigzone.com


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