Krotz Springs refinery sold

• By GARY PERILLOUX
• Advocate business writer
• Published: May 9, 2008 - Page: 1D - UPDATED: 12:05 a.m.

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Eleven years after it bought a refinery in Krotz Springs, Valero Energy Corp. will sell the 85,000-barrel-per-day site for $333 million to Alon USA Energy Inc., an independent oil company based in Dallas.

Valero said it’s focusing investment on bigger refineries closer to the coast, while Alon USA will use the refinery to extend its FINA brand.

Alon USA owns more than 300 convenience stores in West Texas and New Mexico under the 7-Eleven and FINA names. It supplies FINA fuel to more than 800 other stores under different ownership.

Valero executives said the $333 million sale makes sense because Krotz Springs will require additional upgrades to produce low-sulfur diesel, it’s farther from the coast than many of its 16 other refineries and it doesn’t produce as complex a range of products as Valero desires at its mostly bigger refineries elsewhere.

That strategy has played out elsewhere for Valero, which sold a 170,000-barrel-per-day refinery in Lima, Ohio, last year and a much smaller Denver refinery in 2005. And Valero has three other facilities on the block: a 195,000-barrel-per-day operation in Memphis; a 90,000-barrel-per-day refinery in Ardmore, Okla.; and a 275,000-barrel-per-day facility in Aruba in the Caribbean.

“What we said we would do — and this is going back over a year ago — is take a look at our refining portfolio and see if there were some properties that didn’t necessarily fit into the Valero system that might be a better fit with someone else,” Valero spokesman Bill Day said Thursday.

Krotz Springs, considered a medium-sized refinery, fell into that category.

Throughout the day Thursday, Alon USA Energy executives met with the 220 workers at the Krotz Springs refinery, located on 381 acres along the Atchafalaya River, about 20 miles east of Opelousas and 38 miles west of Baton Rouge.

Alon USA’s chief executive, Jeff Morris, said the Krotz Springs refinery ranks among the lowest operating-cost U.S. refineries and places in the top 25 percent for lowest maintenance costs.

Alon will concentrate on paying down debt for the first several years of ownership and completing upgrades within five years that could include the ability to make low-sulfur fuel, Morris said.

Day said Alon had agreed to continue salaries at the same levels and to provide benefits comparable to what Valero is providing, a sentiment echoed by Morris.

“We’re very impressed with what the people at Krotz Springs have accomplished and the quality of the plant,” Morris said. “And we have asked everyone to join us. In regard to our salary and benefits plan, we’re doing our best to provide something equivalent to what Valero provided. We want this to be, as much as we can, transparent to the folks here and we absolutely want them to stay and work with us.”

Valero has been shipping high-sulfur diesel and light cycle oil that require further refining not available at Krotz Springs to other facilities, Day said.