To use, to sell, to convert. Which will Phillips petroleum do with the Alliance refinery in Belle Chasse? Convert – to a storage facility costing hundreds of jobs.
Houston-based Phillips 66 said Monday that it plans to shut its Alliance Refinery in Plaquemine Parish and convert it into a storage terminal, threatening as many as 900 jobs in the latest hit to Louisiana’s refining sector. The plant, which can process more than 250,000 barrels of crude oil a day into gasoline, diesel and other oil products, was put up for sale in August as the company accelerated plans to shift towards lower-carbon fuels. In a prepared statement Monday, Phillips 66 executives said that extensive damage caused by Hurricane Ida meant that it was too expensive to repair and restart. “We made this decision after exploring several options and considering the investment needed to repair the refinery following Hurricane Ida,” said Greg Garland, Chairman and CEO of Phillips 66. “Our decision was a difficult one, and we understand it has a profound impact on our employees, contractors and the broader Belle Chasse community.”
People. The state always touts the number of hires but never thinks there will be a closing. Belle Chasse got used to these 900 and it will hurt that community.
“We made this decision after exploring several options and considering the investment needed to repair the refinery following Hurricane Ida,” said Greg Garland, Chairman and CEO of Phillips 66. “Our decision was a difficult one, and we understand it has a profound impact on our employees, contractors and the broader Belle Chasse community.” “We just met with our employees today at 3:30 and we don’t have any more information on that yet,” Babin said. The closure comes just over a year after Royal Dutch Shell announced the shuttering of its 250,000 barrel a day Convent refinery in St. James Parish, which led to the loss of around 1,100 jobs. Industry analysts say that the closures are a symptom of too much refining capacity across the U.S., particularly as energy companies shift their investments away from oil and gas production and towards renewable energy.
The pandemic did not help as with people staying home cars got used a lot less.
Analysts at energy consultancy Wood Mackenzie said in a recent research report that the coronavirus pandemic sharply curtailed travel last year, reducing demand for gasoline, diesel and jet fuel. While profits on producing those fuels have begun to rebound, they remain far below 2019 levels. At the same time, U.S. refineries are only running at around 75% of their overall capacity. The Alliance Refinery was built in 1971 and covers about 2,400 acres on the west bank of the Mississippi River. While refineries overall have been ailing in recent years, Ida appeared to have dealt the Alliance Refinery its final blow. The refinery’s internal levee wall was breached by the storm surge from the Category 4 storm and five feet of water flooded in, causing extensive damage and oil spills that affected area wildlife. In a recent earnings call, company executives said that the floodwaters damaged the plant’s electrical system. Phillips 66’s bankers in August had said the plant was worth about $500 million, but executives said last month that the storm damage knocked its value down to around $200 million.
The plant did try to keep in business but the industry down turn did not help either.
In May of this year, Phillips 66 applied for economic incentives through the state’s Enterprise Zone program and promised $164.2 million of investment to modernize the refinery. The company said at the time that the work would create 350 construction jobs. Wood Mackenzie analyst Simon Flowers forecasts that as many as 20 refineries globally could be shuttered over the next few years, taking out as much as three million barrels a day of capacity. Last year, six U.S. refineries were shuttered, including the Shell refinery in Convent. That plant was the biggest employer and a major source of tax revenue for St. James Parish. Benny Rousselle, Plaquemines Parish Council Member for District 5, which covers the area of Belle Chasse closest to the refinery, said the news was an unexpected blow. “I’m very disappointed that this decision has been made,” he said. “I hope at least we can salvage some of the jobs with other economic projects.”
Mr. Rousselle, might I suggest renewables?