BP To Sell Carson Refinery

Transaction Type
Sellers
Announce Date
Post Date
Estimated Price
2.5BB
Description

To buy the 266,000 barrel (bbl) per day refinery in Carson, CA and the associated logistics network of pipelines and storage terminals and the ARCO-branded retail marketing network in Southern California, Arizona and Nevada. The sale also includes BP's interests in associated cogeneration and coke calcining operations.

Tesoro Corp. (NYSE: TSO) plans to buy the Carson, California refinery and related logistics and marketing assets in the region from BP Plc for about $2.5 billion.

Tesoro will buy the 266,000 barrel (bbl) per day refinery near Los Angeles and the associated logistics network of pipelines and storage terminals and the ARCO-branded retail marketing network in Southern California, Arizona and Nevada. The sale also includes BP's interests in associated cogeneration and coke calcining operations. The closing is expected to happen before mid-2013.

The price of the assets is $1.175 billion, plus the value of inventory at the time of closing. At current prices, the inventory is valued at approximately $1.3 billion.

"Today's announcement is a significant step in the strategic refocusing of our US fuels business," says Iain Conn, chief executive of BP's global refining and marketing business. "Together with the intended sale of Texas City, this will allow us to focus BP's operations and investments exclusively on our three northern US refineries, which are crude feedstock advantaged, and their large and important marketing businesses."

"As an established refiner and marketer, Tesoro provides a strong future for the business and for its employees," said Conn. BP will sell the ARCO retail brand rights and exclusively license those rights from Tesoro for Northern California, Oregon and Washington and continue to produce transportation fuels at its Cherry Point, Washington refinery. BP will also retain ownership of the ampm convenience store brand and franchise it to Tesoro for use in the Southwest.

In February 2011 BP announced plans to refocus its refining and marketing business on its northern U.S. refineries and find buyers for Carson and the Texas City refinery in Texas. "We are pleased to be delivering on the plan we announced last year and when complete we will have a smaller, but well-positioned and very competitive portfolio of refining and marketing businesses in the US," Conn added. "BP remains committed to supplying US customers with the fuels, lubricants and petrochemicals they depend on while at the same time delivering long-term growth and profits to our shareholders. We are investing heavily in the capabilities of our businesses in line with that commitment."

BP is nearing completion of a multi-billion dollar upgrade at its Whiting Refinery in Northwest Indiana. The largest private sector investment in Indiana history, the project will transform Whiting's crude processing capabilities and is expected to be completed in the second half of 2013. The company is also upgrading the Cherry Point Refinery to produce cleaner burning diesel fuel and investing in a cleaner gasoline project at its joint-venture refinery near Toledo, Ohio.

Today's announcement brings the total value of the divestments that BP has agreed since the beginning of 2010 to $26.5 billion. This is part of the previously announced programm to divest $38 billion of assets by the end of 2013.
The 266,000 barrel per day (bpd) Carson Refinery is one of the largest on the US West Coast. It became part of BP through the 2000 acquisition of ARCO. It employs over 1,100 staff and in total the divested business employs approximately 1,700 staff.

The transaction includes the refinery and integrated terminals and pipelines, as well as marketing agreements with about 800 retail sites in Southern California, Arizona and Nevada.

The refinery is located on 650 acres in Los Angeles County, near the Long Beach and Los Angeles Harbours. The refinery began operations in 1938. It processes crude oil from Alaska’s North Slope, the Middle East, West Africa and other sources. Processing equipment includes the largest fluid catalytic cracker in California, two cokers and distillate hydrocracking.

BP's 51 per cent interest in a nominal 400 megawatt cogeneration facility located at the refinery is included in the sale.
BP's Wilmington Coke Calciner located about five miles from the refinery is also part of the sale. The plant occupies about 17 acres. The plant employs approximately 40 people and produces 350,000 tonnes of calcined coke per year.
Logistics assets included in the sale include ownership of Berth 121 facility improvements and equipment, Marine Terminals 2 and 3 and the LA basin pipelines system that moves crude, products and intermediates to and from the refinery.

Terminals included in the sale are Carson Crude, East Hynes, West Hynes, Hathaway, Carson Products, Colton, Vinvale and San Diego.

BP is currently in the process of carrying out a number of major investments in its other US refineries, including a large investment programm to upgrade its 413,000 bpd capacity Whiting, Ind., refinery; a clean-diesel upgrading project at its 234,000 bpd Cherry Point, Wash., refinery; and the addition of a continuous catalytic reformer to the 160,000 bpd capacity Toledo, Ohio, refinery, a 50:50 joint venture with partner Husky Energy Inc.