Tesoro Corp. officials said Tuesday they are confident the buyer of the company’s Kapolei oil refinery has the expertise and financial backing to operate the facility successfully over the long term.
One of Tesoro’s challenges in selling the refinery was finding a buyer that had funding and a viable business plan to take over the plant and continue refining operations, said Chuck Parrish, executive vice president and general counsel for the San Antonio-based company.
That shouldn’t be an issue for Par Petroleum Corp., the Houston-based energy firm that agreed to buy the Tesoro refinery, its distribution network and 31 gas stations in Hawaii, Parrish told members of a task force formed to come up with contingency plans in the event of a refinery closure.
“We can’t share the nature of their business plan, but we can tell you that one of the challenges we faced as a seller was ensuring that the purchaser would have the wherewithal not just to close the transaction, but to operate the asset after the closing,” Parrish said.
“And those are significant concerns because we believe as a responsible corporate citizen that it would be irresponsible to turn these assets over to someone who didn’t have the wherewithal to run them,” he said.
Tesoro had searched for a buyer for 18 months before announcing Monday that it had an agreement to sell its Hawaii business to Par Petroleum.
Parrish noted that one of the private equity firms helping finance Par Petroleum’s purchase is controlled by Chicago-based billionaire Sam Zell. Publicly traded Par Petroleum plans to raise $200 million by issuing common stock that will be purchased by a group of investors led by Zell Credit Opportunities and Whitebox Advisors.
Par Petroleum also said it plans to hire a former Tesoro executive to run the Kapolei refinery.
Tesoro halted refining operations at the Kapolei plant April 29 and began converting the facility into an import, storage and distribution terminal while continuing to negotiate with a potential buyer or buyers to continue running it as a refinery. Tesoro crews mothballed the refining equipment so that it could be restarted at a later date should a buyer be found.
The process of restoring the refining equipment is expected to take until early September, said plant manager Tom Weber. It will take between 60 and 75 days to complete the necessary maintenance and another two to three weeks to do a refinery “cold start,” he said.
Weber reiterated that no Tesoro employees will lose their jobs as the result of the sale. The company had estimated that as many as 165 positions would be eliminated if no buyer for the refinery was found. The approximately 40 to 45 employees who voluntarily left the company because of job security concerns will be contacted and offered employment, Weber said.
