According to four persons familiar with the situation, Houston-based oil producer Hilcorp is considering converting Phillips 66’s refinery in Alliance, Louisiana, into an oil export terminal, which would eliminate it as a source of motor fuels.
Hilcorp, the largest privately-held oil company in the United States, with operations ranging from Alaska to Pennsylvania to Texas, did not respond to questions regarding its interest in the Mississippi River complex, which spans 2,400 acres.
A buyer was expected to visit the refinery this week, according to the sources.
Phillips 66 declined to comment on the possibility of a buyer visiting the refinery this week.
According to Phillips 66 spokesperson Bernardo Fallas, the hurricane-damaged refinery is still for sale and the “selling process is ongoing.” He stated that the corporation intends to fix the storm damage and reopen the facility.
Phillips 66 started speaking with possible purchasers of the 255,600 barrel-per-day (bpd) refinery in Louisiana’s southeast coast in August. Hurricane Ida knocked it out of operation last month when a protection wall collapsed, flooding the plant.
“In the future, the U.S. refining company will be smaller, not bigger,” Phillips 66 Chief Executive Officer Greg Garland said last month as he outlined plans to expand companies in renewable diesel, hydrogen, and materials for electric-car batteries.
According to those familiar with the factory’s operations, the majority of the several feet of water that flooded it has been removed, and most personnel have returned to clean up the plant.
The US Energy Information Administration said in June that national refining capacity declined by 4.5 percent, or 848,385 bpd, last year due to lackluster refinery earnings and lower gasoline demand due to work-from-home rules.
According to Andrew Lipow, owner of Houston consultants Lipow Oil Associates, converting the Alliance property into crude oil storage and distribution port makes sense.
“These refineries are getting older and older, particularly in an environment when gasoline demand has peaked,” Lipow explained.
This year, the Alliance refinery is one of three on the Gulf Coast that has been put up for sale.
LyondellBasell Industries, Houston refinery, and Royal Dutch Shell’s shutdown 211,146-bpd, Convent plant are the other two.
According to John Auers, executive vice president of refinery consultants Turner, Mason & Company, the Alliance refinery could yet have a future in the present energy shift.
Auers stated, “It’s still a viable refinery.” “A lot of capacity has been shut off. It has the potential to come back with a vengeance.”
Phillips 66 has an incentive to make repairs, according to Auers.
“If a refinery is in functional shape, you always get more money,” Auers added.
