A Bargain at $2.5 Billion
One analyst said the refinery "needs relatively little maintenance" because much of its equipment is new, having been installed after the March 2005 explosion.
- By Jerry Laws
- Dec 01, 2012
Analysts said BP's agreement to sell its Texas City, Texas, refinery to Findlay, Ohio-based Marathon Petroleum Corporation for $2.5 billion looks to be a good deal for both parties. Both companies described it as one of the largest and most complex refineries in America, with BP saying it currently employs some 2,150 BP staffers and from 1,000 to 3,000 contract personnel daily.
Analyst Fadel Gheit of Oppenheimer & Co. told the Houston Chronicle's Emily Pickrell the refinery "needs relatively little maintenance" because much of its equipment is new, having been installed after the March 2005 explosion that killed 15 workers and injured 170 others. OSHA fined BP a then-record $21 million and four years later followed up with 270 failure-to-abate notices. The energy company agreed to a settlement in 2010 calling for it to pay $50.6 million to resolve those notices. BP Products North America Inc. also agreed to pay $13 million in July 2012 to settle 409 willful process safety violations filed by OSHA in October 2009 related to the refinery, and it agreed to pay a $15 million fine in October 2010 for Clean Air Act violations found in inspections after the 2005 explosion.
If the deal is finalized in early 2013 as expected, Marathon Petroleum will have bought a world-class, strategically located refinery and thereby become the fourth-largest refiner in the country. BP will have sold a pair of Texas and California refineries so it can refocus on three others -- located in northwest Indiana, Washington state, and near Toledo, Ohio -– that are crude feedstock advantaged, said Iain Conn, chief executive of BP's global refining and marketing business. "Marathon Petroleum is a highly respected refiner and marketer," he added. "Their ability to take on the responsibilities of this large and complex refinery will be good for the long-term future of the business and its employees."
"During the past several years, the Texas City Refinery has been transformed through a resolute focus on safe, compliant, and reliable operations and in recent months has returned to profitability. It does not, however, fit with the long-term strategic direction of BP's global refining portfolio," said Keith Casey, the refinery's manager, who said the sale announcement "is good for our workers, good for our community, and positions the refinery to achieve its full potential over the long term as part of one of the leading refiner-marketers in the U.S."
This article originally appeared in the December 2012 issue of Occupational Health & Safety.
About the Author
Jerry Laws is Editor of Occupational Health & Safety magazine, which is owned by 1105 Media Inc.