Months after Chevron announced plans to divest $10 billion in assets, the company may be considering selling a refinery in Hawaii, one of five Chevron refining operations in the United States.
The company hired an investment banking firm to identify potential buyers interested in its Hawaiian facilities, which include the refinery in Kapolei on the island of Oahu, a pipeline that connects the refinery to a terminal in Honolulu and five terminals across the Hawaiian islands.
“No decision has been made at this time other than to determine the level of interest of potential buyers,” spokesman Braden Reddall said.
With a capacity to refine 54,000 barrels of crude per day, the Kapolei plant is among the smallest of Chevron’s refining operations, Reddall said. The multinational corporation headquartered in San Ramon, California operates refineries in El Segundo and Richmond, California, Pascagoula, Mississippi and Salt Lake City, Utah, as well as three refineries overseas.
The Kapolei plant started production in 1961 and employs about 200 people. Chevron for years has indicated that the refinery does not perform as well as other Chevron assets, and that the plant may need to be closed, according to a report by the Hawaii Refinery Task Force.
Hawaiian refineries have a competitive disadvantage because they are forced to buy expensive sweet crude to meet the islands’ unusual demands: primarily low-valued residual fuel oil, which is used in steam-powered vessels and power plants, the task force report found.
About 25 percent of crude oil processed by Hawaiian refiners goes to make residual fuels versus 4 percent for U.S. refineries as a whole, according to the report. That configuration makes profitability challenging, the task force said.
Last year, San Antonio-based Tesoro Corp. sold its 94,000-barrel-per-day Hawaiian refinery to a subsidiary of Houston-based Par Petroleum Corp. after more than a year of trying to sell the refinery and distribution assets.
Related: Houston firm to buy Tesoro’s Hawaii refinery
Chevron in March announced plans to divest $10 billion by 2017 as part of the company’s regular re-shifting of its portfolio, Reddall said. That decision comes after the company’s $7 billion divestment from 2011 to 2013. During that period, Chevron shed about $2.5 billion in downstream and chemicals division assets.
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