HOUSTON, Sept 24 (Reuters) – Houston-based oil producer Hilcorp (HILCO.UL) is evaluating Phillips 66’s refinery in Alliance, Louisiana, for conversion into an oil export terminal, mentioned 4 sources acquainted with the matter, a transfer that might get rid of it as a supply of motor fuels.
Hilcorp, the biggest privately owned U.S. oil producer, with operations from Alaska to Pennsylvania to Texas, didn’t reply to questions on its curiosity within the facility, which occupies 2,400 acres alongside the Mississippi River.
Phillips 66 declined to touch upon Hilcorp’s curiosity.
The hurricane-damaged refinery stays on the market and its “advertising course of is ongoing,” mentioned Phillips 66 spokesperson Bernardo Fallas. The corporate plans to restore the storm damages and restart the power, he mentioned.
In August, Phillips 66 started assembly with potential patrons of the 255,600 barrel-per-day (bpd) refinery in Louisiana, on the state’s southeast coast. It was knocked out of fee by Hurricane Ida final month when a protecting wall gave manner, flooding the plant.
“The U.S. refining enterprise sooner or later goes to be smaller, not larger,” Phillips 66 Chief Government Officer Greg Garland mentioned final month as he laid out plans to advance companies in renewable diesel, hydrogen and supplies for electric-car batteries.
Many of the a number of ft of water that flooded the plant has been eliminated and most workers have returned to clean-up of the plant, mentioned folks acquainted with its operations.
In June, the U.S. Vitality Info Administration mentioned nationwide refining capability final yr fell by 4.5%, or 848,385 bpd, due to weak refining earnings with work-from-home insurance policies slashing gasoline demand.
A conversion of the Alliance website right into a crude oil storage and distribution terminal is smart, mentioned Andrew Lipow, president of Houston consultants Lipow Oil Associates.
“These refineries are getting older and older particularly in a local weather the place we’ve seen gasoline demand has peaked,” Lipow mentioned.
The Alliance refinery is considered one of three alongside the Gulf Coast that has been provided on the market this yr.
The opposite two are LyondellBasell Industries’ 263,776-bpd Houston refinery and Royal Dutch Shell’s shuttered 211,146-bpd Convent, Louisiana, refinery.
The Alliance refinery might nonetheless have a future within the present vitality transition, mentioned John Auers, govt vice chairman with refinery-consultants Turner, Mason & Firm
“It’s nonetheless a viable refinery,” Auers mentioned. “We’ve had a whole lot of capability turned off. It might probably come again fairly robust.”
Phillips 66 does have an incentive to make repairs, Auers mentioned.
“You all the time get more cash (for a refinery) if it’s in an operable situation,” Auers mentioned.
Reporting by Erwin Seba in Houston
Modifying by Gary McWilliams and Matthew Lewis