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Sunoco Reaches Deal To Save South Philadelphia Refinery

Mike DeNardo Mike DeNardo
Mike DeNardo, a veteran of KYW Newsradio for more than 25 years,...
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By Mike DeNardo and Ben Simmoneau

PHILADELPHIA (CBS) — It will have a different name, but that doesn’t matter to the 850 people whose jobs have been saved at Sunoco’s South Philadelphia refinery. The company announced a deal Monday to keep the refinery – a fixture of Philadelphia industry for more than a century – open.

READ: Sunoco Plans To Sell Or Shut Philadelphia, Marcus Hook Refineries

Sunoco is partnering with a private investment firm, The Carlyle Group, to form a joint venture that will run the refinery. That venture, known as Philadelphia Energy Solutions, will invest heavily in the 1400 acre site and convert part of it to better process natural gas from the Marcellus Shale. Natural gas is seeing a drilling boom across much of northern and western Pennsylvania.

“It’s a good day for Pennsylvania. It’s a good day for the region. It’s a good day for the people who work here,” said Pennsylvania Governor Tom Corbett, who joined with Philadelphia Mayor Michael Nutter, Congressman Bob Brady and officials from Sunoco and The Carlyle Group to make the announcement. “This will become an energy hub, part of Pennsylvania becoming the energy capital of the world.”

Phil Rinaldi, the new CEO of Philadelphia Energy Solutions, said the company has big plans for natural gas from the Marcellus Shale, which is being extracted in enormous quantities elsewhere in Pennsylvania. Not only will investments allow the refinery to process natural gas, but gas also will also be used to power the refinery’s equipment.

“We have a series of projects that are all going to be based on Marcellus Shale and trying to add value to that gas here in Philadelphia,” Rinaldi said. “It’s a game changer in the refining business.”

It’s also a game changer for the refinery’s 850 employees – who now get to keep their jobs. United Steelworkers Local 10-1 President Jim Savage, which represents 600 of those workers, was elated.

“We shocked the world,” he said. “Nothing is impossible.”

Sunoco CEO Brian MacDonald said Sunoco and the Carlyle Group, an asset management company, are forming a joint venture named Philadelphia Energy Solutions to run the refinery.

“It occurred to me that this was going to take a very differentiated and innovative solution to keep this refinery open,” MacDonald said.

Congressman Bob Brady said that losing the largest refinery on the east coast would have been devastating.

“Imagine the loss,” Brady said. “The jobs, the families, the revenues, the vacant ground — the vacant ground we’d be looking at in the city of Philadelphia. Who knows what could have happened there?”

Congressman Brady credited the union for relentlessly fighting to keep the refinery open. Hundreds of workers hauled their entire families to Washington meet with members of Congress. Rep. Brady also said the deal would not have been possible without new Sunoco CEO Brian MacDonald, who replaced Lynn Elsenhans in March. Elsenhans largely stripped Sunoco of its industrial capacity, refocusing the company on gas stations and convenience stores.

“We would not be here today if that lady was still there. Pardon me, but that’s how I feel,” he said.

Officials expect the refinery’s expansion could create hundreds if not thousands of new permanent jobs along with up to 2,000 construction jobs.

Governor Corbett also said he hopes to have an announcement soon about the fate of Sunoco’s closed Marcus Hook refinery. For now, any new jobs created at the Philadelphia site will be offered first to laid-off Marcus Hook workers.

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