Shop Around - A Look at the Unusually Long List of U.S. Refineries on the Market

It was reported earlier this month that Shell is seeking a buyer for its Washington state refinery, which is located just outside Seattle in Anacortes. That brings to eight the number of U.S. refineries said to be up for sale by a variety of sellers, from integrated major oil companies to independent merchant refiners — plus another refinery that is already under contract. That’s an unusually high number — refineries rarely change hands in the U.S. and when they do, it’s typically for large sums of money to sophisticated and vertically integrated buyers. Today, we discuss the facilities on the block in the East Coast and Mid-Continent regions and the market drivers that could be impacting the decisions of potential buyers and sellers.

Nearly all of the 135 fuel refineries in the U.S. were built prior to 1970 — the original parts of some were constructed as early as the late 1800s. For a variety of reasons, these facilities tend to operate for long periods of time without frequent changes in ownership. There have been a few notable years with a large number of refineries changing hands, such as 2017 and 2018, when nine and 11 refineries were sold, respectively. However, these were mostly due to large spinoffs and mergers, such as Andeavor’s acquisition of Western Refining in 2017, which involved three refineries, and Marathon Petroleum’s acquisition of Andeavor in 2018, which involved 10 refineries. Since 2013, an average of about three refinery transactions have taken place per year involving an average of about five refineries (Figure 1). If we exclude the mergers and spinoffs in 2017 and 2018 and only look at transactions involving a single refinery, then an average of only about two transactions have taken place per year since 2012. In 2019, only one transaction closed: Chevron’s acquisition of Petrobras’ Pasadena, TX, refinery.

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