By Pacific Holdings Inc. has completed its acquisition of the refinery from Exxon Mobil Corp. in the city of Billings in the state of Montana, including the logistics infrastructure of associated subsidiaries of ExxonMobil.
The divestment, announced in October 2022, includes the Silvertip pipeline, ExxonMobil’s 40% interest in the Yellowstone pipeline and Yellowstone Energy LP, and ExxonMobil’s interests in product terminals in Montana and Washington.
The Billings refinery can produce up to 63,000 barrels of oil per day (bpd), processing crude from western Canada and the Rocky Mountains. The storage capacity of the acquired assets amounts to 4.1 million barrels, according to Par Pacific.
New York-listed Par Pacific paid the base price of $310 million with cash on hand while using loans from the associated hydrocarbon inventory, it said in a press release last week.
“This acquisition significantly enhances our scale and geographic diversification,” Par Pacific CEO William Pate said in the announcement. “We expect the transaction to be immediately positive for our earnings and cash flow.”
“The acquisition of Billings enhances the company’s current position in the Pacific Northwest market,” Par Pacific said. It already has refineries in Washington and Wyoming, as well as Hawaii.
The City of Houston energy transporter, refiner and retailer aims to increase the performance and reliability of the Billings refinery toward capacity.
Par Pacific said it is also “evaluating renewable fuel opportunities to complement conventional fuel production at the Billings refinery and use its existing market position in Washington to reduce the carbon intensity of its fuel sales accord with Washington’s recently enacted low-carbon fuel standard.”
The deal includes an agreement for Par Pacific to continue supplying about 250 ExxonMobil-branded retail stations.
Par Pacific reported 1.491 million bpd in refined product sales volume in the first quarter, when it posted net income of $237.89 million. It had an oil refining capacity of 154,000 bpd, storage capacity of nine million barrels, 119 commercial locations in the Pacific Northwest and Hawaii and 179 miles of pipeline as of the period, according to its website.
Reduction of fossil fuels
ExxonMobil’s divestment of Par Pacific is among successive sales involving its fossil fuel business. In a deal expected to close in mid-2023, it has transferred its fuel production assets in Italy to local company Italiana Petroli SPA, as its Italian unit announced on 20 December. The company Bangchak Corp. PCL, is expected to close in the second half of this year, as ExxonMobil announced on January 11. The Thailand transaction involves ExxonMobil’s distribution terminals and retail stations, as well as its Sriracha refinery.
ExxonMobil has spared its lubricants and chemicals business in both countries.
The sales come amid similar moves by global energy giants against the backdrop of a global clamor for clean energy. The likes of BP PLC and Shell PLC have included refining operations in their decarbonisation strategies towards net zero by 2050.
“For most majors, a bit more divestment from non-core assets is desirable,” Wood Mackenzie analyst Alan Gelder wrote on February 13.
“ExxonMobil has a number of refinery-only sites that don’t fit its long-term strategy. BP is down to six refineries, but needs to get rid of at least one more to meet its 2030 goal of reducing refinery capacity. Shell has identified five key integrated petrochemical assets and needs to divest others. TotalEnergies may choose to sell its remaining stand-alone refineries rather than convert them to bio-sites. And Chevron still has weak sites its strategic focus on downstream decarbonisation”.
But a lack of buyers and strong refining profits could slow those divestments, he said.
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