The Carlyle Group and Sunoco have agreed to form Philadelphia Energy Solutions, a joint venture that will enable the historic Philadelphia refinery to continue operating. The refinery, which processes 330,000 bbl/d of crude oil into various refined products, was scheduled for shut down in August 2012.
Under the terms of the agreement, Sunoco will contribute its Philadelphia refinery assets to the joint venture in exchange for a non-operating minority interest. The Carlyle Group’s investment will flow directly to the refinery’s balance sheet to fund future capital projects, facility upgrades and enhance the refinery’s working capital. Carlyle will hold the majority interest, and oversee day-to-day operations of the joint venture and the refinery.
The joint venture's projects include the upgrade and refurbishment of the catalyc cracker, to improve reliability and operating performance. The project will create more than 1,000 contracting jobs when the upgrade commences. Philadelphia Energy Solutions will also build a high-speed train unloading facility to provide access to greater quantities of crude oil from North America (versus imported crude), particularly high-quality, low sulfur crude from the Bakken region in North Dakota. The joint venture will also build a mild hydrocracker and a hydrogen plant; by converting the existing middle distillate Hydrotreater into a Mild Hydrocracker and constructing a natural gas-based hydrogen plant, the refinery will produce a more environmentally friendly mix of refined products. The project will create several hundred construction jobs. The joint venture is also exploring other significant capital projects, including the creation of new businesses based on the availability and abundant levels of natural gas from the Marcellus Shale.