By KATHLEEN E. CAREY
kcarey@delcotimes.com

The shutdown of the Sunoco Marcus Hook refinery will begin today — a move that’s expected to throw almost 500 people out of work and end a 109-year-old tradition on Delaware County’s riverfront.

Due to what they defined as declining market conditions, Sunoco Inc. officials decided Thursday to expedite the closure of the riverfront plant by several months because of its financial performance. Company officials said they expect the idling to be complete the early part of next year.

“Market conditions have deteriorated significantly and the outlook for both motor fuel demand and refining margins remains weak,” said Sunoco Chairman and CEO Lynn Elsenhans. “Our retail and logistics businesses are performing well, but given the negative realities of the Northeast refining marketplace, we need to accelerate the timeline for idling our Marcus Hook processing units.”

In September, company executives announced they would close their Marcus Hook and South Philadelphia refineries if a buyer for the facilities wasn’t found by July.

During the November third-quarter results release, Elsenhans said that deadline could be moved up if shareholders determined that the refineries’ financial performance merited it.

Thursday’s decision currently doesn’t affect the Philadelphia facility.

“Both refineries are losing money but Marcus Hook is losing more money,” Sunoco spokesman Thomas Golembeski said, adding that Philadelphia had greater production capabilities for diesel, heating oils and other oil products.

He declined to say how much money each plant was losing.

Of the 590 employees at the Delaware County refinery, 300 of them are represented by the United Steelworkers Union Local 10-901.

Dave Miller, Local 10-901 president, said he met with company officials Wednesday for a grievance and had no hint of Thursday’s announcement. Continued...

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“I find it hard to believe that they’ve been honest,” Miller said. “They’ve been deceitful from the very beginning.”

He said he was shocked by the announcement, adding that he was expecting a six months’ plant closure notice, which the Steelworkers local in Philadelphia received.

Instead, Miller said, he was given the 90-day layoff notice with an indication that the company won’t recognize the seniority clause in the contract.

“They systemically dismantled (it) and now they’re going home,” Miller said. “I don’t wish them well. I’m pretty shook up right now.”

Since the September announcements, union officials have doggedly lobbied for the jobs of their members. They launched a “Save the Northeast Refineries” online petition that drew more than 5,000 signatures. They lobbied state and federal elected officials in Washington and in Harrisburg. They hosted a march and rally through Marcus Hook on Nov. 5 with 1,000 participants.

U.S. Rep. Patrick Meehan, R-7, of Upper Darby, who previously met with the Steelworkers, voiced his disappointment Thursday in Sunoco’s decision.

“I had been hopeful as were so many that the marketability of the refineries could have born some fruit,” he said. “It’s not impossible that they still may.”

He said he was optimistic that the reversal of the Midwestern pipeline reducing the costs of crude oil by $10 a barrel would aid the jeopardized refineries.

Meehan also expressed concern that the Northeast could lose 40 percent of its refining capacity with the closure of the three Delaware Valley refineries.

He said the majority of the refineries would then be located in two regions of the country, which could cause potential supply issues in the event of a natural disaster, such as an earthquake or tropical storm. Continued...

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The congressman added that he didn’t know how Sunoco’s move would affect prices at the pump.

“For the consumer, the lack of this refining capacity may well lead to higher prices,” he said, “and that’s just another unfortunate implication of these refineries closing.”

Meehan said his thoughts are with the employees and their families.

“Our immediate concerns are these Steelworkers, these refinery workers, who are looking at the end of their paycheck in 90 days,” he said.

Miller said his local, as well as USW Local 10-1 and 10-234, representing Sunoco Philadelphia and ConocoPhillips employees, has attempted on its own to find buyers for the refineries.

“(We) have been very out front trying to find prospective buyers,” he said. “(The company has) done absolutely nothing in my opinion. I think it’s all about theatrics to cover their tracks, that’s my opinion. Unfortunately, it’s all one big show.”

Sunoco hired Credit Suisse to oversee the marketing of the sites and has claimed the sale process is moving forward with an undisclosed number of buyers visiting the sites in the next few weeks.

“As long as the sales process is ongoing, we’ll keep our options open and we’ll idle the plant in a way that it can be restarted,” Golembeski said. “We’re continuing to pursue a sale at both plants. The reality is that market conditions have deteriorated rapidly.”

Losses in the company’s refining and supply sector were reported in nine of the last 11 quarters. The third-quarter report this year had a $17 million loss.

“We have lost more than $800 million in our refining business since 2009,” Golembeski said. Continued...

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He said refining benchmark profit margins for the Northeast were in the $6 to $7 range per barrel in the summer; they’re just $3.50 per barrel now.

The Marcus Hook plant refined 175,000 barrels per day, including the Sunoco Green E15 fuel used solely by the NASCAR racecars. Golembeski said the company would continue to provide NASCAR with its fuel.

He said the decision to idle Marcus Hook was driven, in part, by increasing the capacity utilization in Philadelphia to save as many jobs companywide as possible.

Golembeski said of the 590 positions at the Delaware County plant, 100 are expected to be retained and 65 people redeployed elsewhere throughout the company. Some 35 will remain at Marcus Hook for ongoing operations and retail operations support.

About 100 of the 490 employees losing their jobs are eligible to retire, he said.

Union employees will continue to work or receive wages and benefits for 90 days and company officials will negotiate other severance details.

Given 60 days notice, salaried workers are expected to be relocated to other positions throughout the company, either at Philadelphia’s refinery or in Sunoco Logistics. Those who are not placed in alternative positions will be given severance benefits and job placement services.

Golembeski said the company will set up an onsite career center.

In related matters, the ConocoPhillips refinery in Trainer has been idle since September, when officials there said they would shut down the plant if a new owner wasn’t located.

United Steelworkers Union officials have stated that the closure of all three Delaware Valley plants would result in the direct loss of 2,000 jobs and affect 18,000 others.

The Sunoco Marcus Hook plant dates to the time of Joseph Newtown Pew, who founded the Sun Oil Co. after the Spindletop oil field was discovered in East Texas.

Pew bought 82 acres of the Lindenthorpe estate on the Delaware River for $45,000 to start processing the Texas crude.

On March 21, 1902, the SS Paraguay delivered the first shipment of 19,231 barrels of crude from Spindletop to the Marcus Hook refinery.

It was here that the first catalytic cracker went into operation in 1937, processing 15,000 barrels of petroleum daily.

During World War II, Sunoco employees here processed the most jet fuel for the Allies with 41 million barrels of petroleum delivered to the war effort.

Recently, employees refined 175,000 barrels of crude oil at the 781-acre facility. That’s the equivalent of filling up 252,000 cars with gasoline, 1,500 flights from the Philadelphia International Airport with jet fuel or 300,000 homes with heating oil.

The company estimated that the economic impact of the facility is $97 million annually, including $51 million of wages, benefits and other compensation paid to hourly workers, $12 million in payroll and income taxes generated by these jobs and $34 million paid to local contractors for services at the refinery.

Marcus Hook Mayor James Schiliro has said Sunoco’s absence would punch a $1 million hole in the borough’s $2.9 million budget.

Chichester School District officials have said they would lose $2.7 million without Sunoco. More than half of the district’s students are enrolled in the federal free and reduced lunch program for families in need.

With regards to the Marcus Hook refinery decision, Golembeski said Sunoco’s board of directors met Thursday and made its determination at that time.

Then, he said company officials met with union officials, a news release was issued and an announcement was sent through the company email system to employees.

Golembeski said meetings with workers will continue today.

The Marcus Hook and Philadelphia plants are the final refineries in Sunoco’s portfolio, the Sunoco spokesman said.

“This decision is not made lightly,” Golembeski said. “It was a difficult decision given the impacts to the people and the community. We’ll work closely with our employees and the community throughout this process. We’re going to deploy as many people as we can.”

Miller said he had a bet with a friend that Sunoco executives would announce a shutdown on Christmas Eve. His estimate was off by 23 days.

“There’s a lot of people that put their whole lives in this whole place that just got their lives kicked to the curb,” he said.

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