Yorktown refinery to shut doors

by Bill Nachman - Posted on Aug 11, 2010 - 03:05 PM

The Yorktown oil refinery—the source of many local jobs and fuel for 50 years—will close within the next couple of months, executives for parent Western Refinery, Inc., announced.

Gary Hanson, vice president of corporate communications for the El Paso, Texas-based company, said in a telephone interview earlier this week that closing the refinery will mean the loss of more than 200 employees. York County officials said about 100 contract workers also will lose their jobs at the refinery.

Western plans to keep its distribution terminal open at the Yorktown facility. In all, Western plans to retain 25-30 workers at Yorktown, Hanson said, most at the distribution facility and some to maintain the refinery in case the company later wants to reopen the facility—a process that could take up to nine months—or eventually to seek a buyer for the refinery.

Also, Hanson said there’s a chance that a small number of Yorktown refinery workers might be reassigned to another Western facility. The Yorktown jobs will be phased out over the next six weeks or so, with workers notified in stages, he said. The company plans severance packages and will provide employment counseling and related services.

Western’s announcement to close the refinery "hits home for many families in the Yorktown area, as they grapple with news of lost jobs," said Rep. Rob Wittman (R-Montross). "This is an unfortunate sign that our economy still struggles, and underlines the country’s need for a comprehensive energy policy."

Hanson said that Western’s main refinery in Texas and a smaller facility at Gallup, N.M., will remain open. Also, the company operates a number of convenience stores, acquired several years ago when Western—which principally deals in southwest markets—purchased Giant, which was the previous owner of the Yorktown facility. Earlier, BP and Amoco owned the local plant.

What effect the refinery’s closing will have on local fuel prices is unclear. Hanson said that Western will still distribute fuel from Yorktown, but now will purchase it already refined at another site.

The announcement to close the refinery was made last Thursday in conjunction with Western’s issuing its earnings report for the second quarter, which ended June 30, 2010. Western reported net income of $14.4 million, or 16 cents per diluted share, the corporate report said, versus a net loss, excluding special items, of $28.5 million, or 39 cents/share, for the same period in 2009.

Western said in a prepared statement that closing the Yorktown refinery was "due to the poor outlook for East Coast refining." The report emphasized that Western will "continue to operate the Yorktown products terminal and supply the region with finished products" such as gasoline and lubricants.

"The decision to suspend refining operations at the Yorktown refinery was a difficult, but necessary, decision driven by the on-going challenging refining margin environment experienced on the East Coast," said Jeff Stevens, Western’s president and chief executive officer.

 

Bloomberg.com, a business internet site, reported that Stevens said in a conference call with reporters last week that Western is evaluating "all strategic alternatives for the (Yorktown) facility." The refinery receives most of its crude and other fuel stocks from Canada, the North Sea, South America, and the Far East, according to the Western website.

Late last year, two other major East Coast refineries were closed. Bloomberg.com reported that in November Sunoco, Inc., closed its Eagle Point refinery in Westville, N.J., while Valero Energy Corp. shut down its Delaware City, Del., refinery that same month.