Potential buyer would keep Tesoro facility a refinery, official says

As Tesoro Corp. pushes ahead with previously announced plans to close its Kapolei refinery next week and convert it into an import terminal, the company is talking to one buyer that wants to operate it as a refinery, a union official said.

Tesoro said Thursday it is continuing to negotiate with potential buyers for the refinery but could not share details.

The company, which announced the closure of the refinery in January, processed its last shipment of crude oil earlier this week. Tesoro said it has suspended plans to lay off 210 of the plant’s 240 workers while negotiations with potential buyers continue.

"We were told that the company had a couple of interested buyers — one that wants to keep it as a refinery and another that wants to make it a terminal," said Pat Koge, a Tesoro employee and Hawaii unit chairwoman for the United Steel Workers Local 12-591, which represents many of the refinery’s workers.

"There is no guarantee that it will stay a refinery, but that is preferable because workers could keep their jobs," Koge said. Some union members who had begun looking for refinery work on the mainland put their job searches on hold to see whether there was a chance refining operations would be restarted at the Kapolei plant, Koge said.

After next week, Tesoro plans to keep a small group of employees to help convert the refinery to an import terminal for refined products. The company also has begun shutting down and preserving the refining equipment in the event a buyer wants to restart refining operations.

"As we had announced, we are proceeding with plans to convert the refinery to a storage and distribution terminal and we remain on schedule to complete the shutdown process this month," company spokes­man Lance Tanaka said in a prepared statement.

"During this time, we continue to actively market the assets for sale, including the refinery. However, Tesoro is unable to share details as all discussions with potential buyers remain confidential."

Tesoro met with refinery workers Monday to brief them on the situation.

U.S. Sen. Brian Schatz said his office has been monitoring Tesoro’s efforts to sell the refinery.

"As talks between Tesoro and the potential buyers of their refinery in Hawaii continue, my office has been in regular contact with the parties, including the United Steel Workers Union, and I am hopeful about the prospects for the refinery’s continued use," Schatz said in a prepared statement.

"I am encouraging the discussions to continue and for us to stay focused on sustaining jobs for our people and on avoiding any future economic disruptions."

San Antonio-based Tesoro put its Kapolei refinery up for sale in January 2012. Although it had negotiations with several prospective buyers that reached advanced stages during 2012, Tesoro was not able to reach an agreement, according to sources familiar with the talks. The company announced Jan. 8 that it was moving ahead with plans to close the refinery.

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UPDATE: This story has been updated to include Tesoro’s suspension of its layoffs plans while sale negotiations continue. An earlier version of this story reported the company’s original plan to start laying off employees Wednesday.  (April 26, 2013)