NEW YORK:
Preferred Sands, a unit of a privately owned Pennsylvania-based investment firm, is seen as a possible frontrunner to buy Sunoco's Philadelphia refinery, two sources familiar with the bidding process said.
As discussions intensify with a handful of varied firms that are said to be considering a bid for the 335,000 barrel per day (bpd) plant, Preferred is working with a group of local pension funds as well as more traditional financiers to put together a deal.
"We made a very substantial bid on the refinery," confirmed Mike O'Neill, founder and chief executive officer of Preferred Unlimited, the parent company when contacted by Reuters. "We will continue to run it as a refinery and use our substantial logistics experience and leverage our oil industry logistic knowledge," he added.
The oldest continuously operating plant in the US, Sunoco's Philadelphia refinery is the largest of three East Coast plants shuttered or put on the sales block as the rising cost of importing crudes squeezed margins. It is still operating but Sunoco has said it will idle the plant on July 1 if it is not sold. The sale has become politically charged on a local and national level, both over potential job losses and a possible squeeze on regional fuel supplies this summer. Preferred Sands, based in nearby Radnor, is a supplier of sand and proppant to the hydraulic fracturing industry, and also operates a fleet of more than 1,500 rail cars with connections to major railroads.
O'Neill said the rail connection would be able to help the refinery run a lot more of the cheaper domestic North American crude including Bakken from North Dakota, which would improve profit margins. Earlier this year, Sunoco said it had already tested small amounts of Bakken crude at its Philadelphia refinery. Other bidders for the refinery include United Refining, a small privately held refining company in the northwest corner of the state.
Copyright 2012 Oil & Gas News - Hilal Publishing and Marketing Group Syndigate.info, Al bawaba.com. All Rights Reserved.
(Originally published April 9, 2012, in Oil & Gas News.)
