Equilon Enterprises LLC d/b/a Shell Oil Products U.S. (Shell), a subsidiary of Royal Dutch Shell plc, has reached an agreement for the sale of its Puget Sound Refinery near Anacortes, Washington to a subsidiary of HollyFrontier Corporation, an independent refiner headquartered in Texas (HollyFrontier), for USD 350 million in cash plus the value of the hydrocarbon inventory. The transaction is expected to close in Q4 2021, subject to regulatory clearance and other customary closing conditions.
The divestment is part of Shell’s strategy to reduce its global refinery footprint to core sites integrated with the company’s trading hubs, chemicals plants and marketing businesses. These high-value energy and chemical parks will produce more low-carbon fuels and speciality chemicals for the customers.
“This is another step towards reshaping our refining portfolio to drive resilient returns,” said Robin Mooldijk, Shell’s EVP for Manufacturing. “HollyFrontier is a strong operator, and we believe they will continue the refinery’s legacy of prioritizing safety, environmental performance and care for people at the site and within the community.”
“We are excited to announce the acquisition of the Puget Sound Refinery, an asset with a strong record of financial and operational performance. We believe that the Puget Sound Refinery will complement our existing refining business, with sales into premium product markets and advantaged access to Canadian crude. We are committed to the continued safe and environmentally responsible operations of the facility and welcome Puget Sound’s highly skilled workforce to the HollyFrontier family,” Mike Jennings, President and CEO of HollyFrontier commented.
The Puget Sound Refinery is strategically located on approximately 850 acres in Anacortes, Washington, approximately 80 miles north of Seattle and 90 miles south of Vancouver. The 149,000 barrel per day facility is a large, high quality and complex refinery with catalytic cracking and delayed coking units and is well positioned geographically and logistically to source advantaged Canadian and Alaskan North Slope (“ANS”) crudes.
In addition to refining assets and an on-site cogeneration facility, the transaction includes a deep-water marine dock, a light product loading rack, a rail terminal, and storage tanks with approximately 5.8 million barrels of crude, product and other hydrocarbon storage capacity.
About Puget Sound Refinery
The Puget Sound Refinery is currently designed to process approximately 149,000 barrels per day of crude oil. The refinery produces multiple types of gasoline in addition to fuel oil, diesel fuel, propane, jet fuel, butane, and petroleum coke. It also produces nonene and tetramer, which are chemicals used in a variety of plastic products.
The hydrocarbon inventory will be valued at closing based on actual volumes and prevailing market prices. The current value of the hydrocarbon inventory would range from USD 150 to USD 180 million assuming current market prices and historic inventory volumes under normal operating conditions.
“As this deal progresses towards closing, our Goal Zero safety program will remain in full effect, with a focus on a safe transition and care for our employees throughout this time of change. All employees providing dedicated support to Shell’s Puget Sound Refinery will be offered employment with HollyFrontier,” reads Shell’s press release.
About HollyFrontier Corporation
HollyFrontier Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and other specialty products. HollyFrontier owns and operates refineries located in Kansas, Oklahoma, New Mexico, and Utah and markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. In addition, HollyFrontier produces base oils and other specialized lubricants in the U.S., Canada and the Netherlands, and exports products to more than 80 countries. HollyFrontier also owns a 57% limited partner interest and a non-economic general partner interest in Holly Energy Partners, L.P., a master limited partnership that provides petroleum product and crude oil transportation, terminalling, storage and throughput services to the petroleum industry, including HollyFrontier Corporation subsidiaries.