Inspectioneering
News

Hilcorp Evaluating Phillips 66 Alliance, Louisiana Refinery

Reuters, September 24, 2021
Reuters

Houston-based oil producer Hilcorp is evaluating Phillips 66's refinery in Alliance, Louisiana, for conversion into an oil export terminal, said four sources familiar with the matter, a move that would eliminate it as a source of motor fuels.

Hilcorp, the largest privately owned U.S. oil producer, with operations from Alaska to Pennsylvania to Texas, did not reply to questions about its interest in the facility, which occupies 2,400 acres along the Mississippi River.

The sources said a buyer was scheduled to visit the refinery this week.

Phillips 66 declined to comment on a buyer's possible visit to the refinery this week.

The hurricane-damaged refinery remains for sale and its "marketing process is ongoing,” said Phillips 66 spokesperson Bernardo Fallas. The company plans to repair the storm damages and restart the facility, he said.

In August, Phillips 66 began meeting with potential buyers of the 255,600 barrel-per-day (bpd) refinery in Louisiana, on the state's southeast coast. It was knocked out of commission by Hurricane Ida last month when a protective wall gave way, flooding the plant.

The U.S. refining business in the future is going to be smaller, not bigger,” Phillips 66 Chief Executive Officer Greg Garland said last month as he laid out plans to advance businesses in renewable diesel, hydrogen, and materials for electric-car batteries.

Most of the several feet of water that flooded the plant has been removed and most employees have returned to clean-up of the plant, said people familiar with its operations.

In June, the U.S. Energy Information Administration said national refining capacity last year fell by 4.5%, or 848,385 bpd, because of weak refining profits with work-from-home policies slashing gasoline demand.

A conversion of the Alliance site into a crude oil storage and distribution terminal makes sense, said Andrew Lipow, president of Houston consultants Lipow Oil Associates.

These refineries are getting older and older especially in a climate where we have seen gasoline demand has peaked,” Lipow said.

The Alliance refinery is one of three along the Gulf Coast that has been offered for sale this year.

The other two are LyondellBasell Industries’ 263,776-bpd Houston refinery and Royal Dutch Shell’s shuttered 211,146-bpd Convent, Louisiana, refinery.

The Alliance refinery could still have a future in the current energy transition, said John Auers, executive vice president with refinery-consultants Turner, Mason & Company

It’s still a viable refinery,” Auers said. “We’ve had a lot of capacity turned off. It could potentially come back pretty strong.”

Phillips 66 does have an incentive to make repairs, Auers said.

You always get more money (for a refinery) if it’s in an operable condition,” Auers said.


(Reporting by Erwin Seba; Editing by Gary McWilliams, Matthew Lewis, and Daniel Wallis)

Click here to read the full article from Reuters.

Copyright 2021 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.

Talent Solutions

Discover job opportunities that match your skillset.

Case Studies

Learn from the experience of others in the industry.

Integripedia

Inspectioneering's index of mechanical integrity topics – built by you.

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.

Expert Interviews

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

Event Calendar

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

Downloads

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

Videos

Watch educational and informative videos directly related to your profession.

Acronyms

Commonly used asset integrity management and inspection acronyms.