Deal Reached to Keep Sunoco’s Philadelphia Refinery Open will Save 850 Jobs
A deal to keep Sunoco Inc.’s Philadelphia refinery open as a joint venture was reached by The Carlyle Group and Sunoco.
The Carlyle Group, a Washington private-equity manager, announced plans Monday to operate the refinery with Sunoco as a joint venture called Philadelphia Energy Solutions, reported Andrew Maykuth for the Inquirer.
The move will save 850 jobs at the refinery, the largest fuel-production plant in the northeastern part of the U.S. and may employ hundreds more if plans to expand production are realized.
Carlyle officials said they are “reimagining” the business to exploit new, cheaper domestic sources of crude oil to replace expensive imported petroleum – which is a major reason the refinery was uncompetitive.
In September, Sunoco announced plans to sell or shut down the plant this summer, saying it was losing a million dollars a day on fuel production, according to the report.
Carlyle will have a majority interest in the venture and operate the refinery and also plans to increase dramatically the use of low-priced natural gas from Pennsylvania’s Marcellus Shale region to reduce refining costs and emissions.
“We believe the changing nature of the energy paradigm in the U.S., coupled with a redefined operating model, can truly benefit this refinery,” Carlyle managing director Rodney Cohen said at a news conference Monday.
The U.S. Energy Department had warned that a shutdown of the refinery would have had enormous repercussions and could lead to spot shortages of fuels and spikes in price.
The state estimates that the plant, which hires skilled labor, supports 10,000 jobs indirectly. Two refineries have merged into one at the site, occupying more than two square miles of South Philadelphia.
United Steelworkers (USW) Local 10-1 leaders and members were given little hope of keeping the refinery going when Sunoco Inc. announced it would shut down the company’s Philadelphia refinery if a buyer was not found. After a campaign waged by the local and international union, members ratified a new contract with the new owner Philadelphia Energy Solutions, which is a joint partnership between The Carlyle Group and Sunoco.
“I am extremely proud of the local union leadership and members who refused to believe there was no hope,” said USW International President Leo Gerard. “I don’t think this refinery would have been sold if there hadn’t been a union to fight for this facility and to fight for the survival of the surrounding communities.”
USW Locals 10-1, 10-901 and 10-234 led a campaign to find buyers for the two Sunoco facilities in Philadelphia and Marcus Hook and the former ConocoPhillips refinery. Late last year, they contacted local, state and national elected leaders and persuaded them to help find buyers and keep the refineries operating.
The international union searched for buyers for the three refineries and reached out for assistance from the Obama Administration. Top USW officials contacted The Carlyle Group with which it had a prior relationship.
“Our members worked hard to ensure there would be good, family-supporting jobs in their communities,” said USW International Vice President Tom Conway. “Most important, they clearly communicated how consumers and their local communities would be negatively impacted by the refinery shutdowns. Once the elected officials and the public understood this, positive change began.
“This new three-year agreement enables the company to make large investments that will result in hundreds of new jobs,” Gary Beevers said. “It gives the company more flexibility, while providing industry-standard wages, benefits, and health and safety protections.”