Delaware refinery sold, will reopen

A Delaware oil refinery that closed in November will be reopened under new ownership, restoring most of the 550 lost jobs.

Valero Energy Corp. announced Thursday that it had sold the shuttered Delaware City, Del., refinery for $220 million to PBF Energy Partners L.P., headed by veteran refining executive Thomas D. O'Malley.

O'Malley operated the refinery before Valero bought it in 2005. He is now chairman of Petroplus Holdings AG, a European refiner. In a conference call with Gov. Jack Markell, O'Malley said PBF planned to spend $125 million to $150 million to refurbish the refinery this year. It will reopen during the second quarter of 2011.

"We know the plant, we know the facilities, we know the equipment," he said.

O'Malley, Delaware officials, and labor union leaders said they worked feverishly to strike a deal.

"It's just a miracle," said Harry Gravell, president of the Delaware Building Trades Council.

Markell said PBF was committed to lowering the plant's emissions 10 percent. O'Malley said the refinery would be retooled to produce low-sulfur diesel.

Valero spokesman Bill Day said the San Antonio, Texas, company had tried unsuccessfully to sell the refinery for a year before deciding to shut it down permanently. He said it proved easier to sell a closed refinery than an operating facility.

"This is not a refinery deal," Day said. "It's an asset deal."

PBF Energy Partners, formed in 2008, includes two private-equity investors, the Blackstone Group L.P. and First Reserve Corp. The refinery purchase is its first deal.

O'Malley is the former chairman of Premcor Inc., which owned the Delaware City plant for a year before the company was sold to Valero in 2005.

The refining industry is suffering through a downturn it blames on overcapacity and slumping demand for fuel.

Valero is also exploring a sale of its Paulsboro refinery. Day said several potential buyers had expressed interest, "but it's a long process."

Sunoco Inc., the region's largest refiner, in November idled its Eagle Point refinery in Westville and shifted operations to its Philadelphia and Marcus Hook refineries.