Refinery bid delays layoffs at Tesoro

Tesoro Corp. has put on hold plans to lay off 210 workers at its Kapolei refinery while it pursues negotiations with a potential buyer that would continue refining operations at the facility, a company spokes­man said Friday.

The decision represents a change of course from Tesoro’s announcement in late February that it expected to begin laying off the workers next week as part of a closure of the refinery.

Tesoro processed its last barrel of crude oil earlier this week as it pressed ahead with plans to convert the refinery into a facility to import refined petroleum products for its Hawaii customers. Tesoro officials announced the refinery shutdown in January after trying unsuccessfully for a year to sell it. At that time they said they would seek a buyer for the company’s terminal, distribution and retail assets.

Since then, however, at least one buyer has emerged that wants to continue refining operations at the Kapolei plant. Tesoro is continuing to negotiate with that party as well as with at least one other that wants to buy the nonrefinery assets.

The sale of an oil refinery can be complex undertaking because of the environmental liability of soil contamination caused by petroleum products, according to industry experts. Soil contamination was a point of contention when Tesoro bought the refinery from Broken Hill Proprietary in 1998.

Tesoro spokesman Lance Tanaka said that although the layoffs were put on hold, he could not comment on what that means regarding the likelihood that the refinery will be sold.

"We cannot predict the outcome of our discussions with potential buyers, nor can we predict the future of Tesoro employees’ employment with a new owner," Tanaka said. "However, Tesoro is committed to evaluating and pursuing all options that could potentially result in a successful sale."

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