Inspectioneering
News

Groups Bidding for PES Refinery Set to Tour Fire-Damaged Site

Reuters, October 15, 2019
Reuters

Groups vying for the idled Philadelphia Energy Solutions oil refinery have entered the second phase of the bidding process and are gearing up for visits to the plant, according to three sources familiar with the matter.  Roughly a dozen parties are in the running to buy the refinery, a source familiar with the situation said, pitching various uses for the fire-damaged facility that has been used to store and process fossil fuels for the last 150 years.

The effort began after PES closed its refinery and filed for bankruptcy on July 21, following a colossal blaze at one of its most dangerous fuel-producing units. Whoever wins the auction to purchase the 1,300-acre site will hold the keys to reopen the largest and oldest East Coast oil refinery or repurpose all or part of it for another use.

Prospective buyers are seeking answers to a host of unanswered financial and legal questions, including potential environmental cleanup costs and uncertainty around insurance proceeds. Groups in the bidding process are being given more information about PES’ finances and operations and are expected to tour the site, three sources familiar with the plans said. They have also been asked to submit more detailed proposals, as opposed to limited initial bids, by late November.

While the sale process is moving ahead, PES recently detailed in a court filing a way in which it could reorganize the company if it is able to reach agreements with creditors to swap debt obligations for shares in the company. Such a move could avert a sale, according to the documents, which were filed on Thursday in the U.S. Bankruptcy Court for the District of Delaware. PES has told buyers it reserves the option not to sell the plant after final bids are submitted.

Along with basic purchase price questions, bidders are being asked what, if any, portion of future insurance payouts tied to the blaze they would need to close a deal, the sources said. They have also been asked what percentage of any award they would require if PES wins its multi-hundred-million-dollar lawsuit against the federal government over excise taxes.

Parties that have publicly declared their pursuit of the PES complex include a group led by onetime PES Chief Executive Officer Philip Rinaldi, which has proposed restarting the full 335,000 barrel-per-day refinery and adding renewable natural gas production. Philadelphia-based S.G. Preston pitched a renewable diesel and renewable jet fuels operation that would use a portion of the plant’s processing and logistics infrastructure. Real estate developers, including Industrial Realty Group LLC and Alterra Property Group LLC, have also made early bids, the sources familiar with the plans said.

Outstanding questions include who is still working for PES, after it laid off most of its pre-fire workforce of 1,000 people, and the cost of maintaining water treatment systems so that rain and melted snow contaminated on-site do not stream into the nearby Schuylkill River, sources familiar with the plans said.

Prospective buyers must also contemplate the costs and responsibility for cleaning up PES land, especially if the winning bidder uses the site for something other than refining. Soil and water at the PES site have been contaminated by more than a century of hydrocarbon releases, and chemicals harmful to human health, such as benzene, have been detected on the compound, according to the Pennsylvania Department of Environmental Protection. PES is currently responsible for cleanup costs for contamination that happened after 2012, when the company was formed. Previous refinery owners are charged with clearing earlier contamination.


(Reporting by Laila Kearney; Editing by Tom Brown)

Click here to read the full article from Reuters.

Copyright 2019 Thomson Reuters. Click for restrictions.

Comments and Discussion

There are no comments yet.

Add a Comment

Please log in or register to participate in comments and discussions.


Inspectioneering Journal

Explore over 20 years of articles written by our team of subject matter experts.

Company Directory

Find relevant products, services, and technologies.

Job Postings

Discover job opportunities that match your skillset.

Case Studies

Learn from the experience of others in the industry.

Event Calendar

Find upcoming conferences, training sessions, online events, and more.

Industry News

Stay up-to-date with the latest inspection and asset integrity management news.

Blog

Read short articles and insights authored by industry experts.

Acronyms

Commonly used asset integrity management and inspection acronyms.

Downloads

Downloadable eBooks, Asset Intelligence Reports, checklists, white papers, and more.

Videos

Watch educational and informative videos directly related to your profession.

Expert Interviews

Inspectioneering's archive of interviews with industry subject matter experts.