Suncor Energy acquires second refinery near Denver, Colorado

abarrelfullabarrelfull wrote on 29 Mar 2013 11:09

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Suncor Energy Inc. announced today that its U.S. subsidiary has expanded its refining operations by acquiring a Valero Energy Corporation (NYSE: VLO) refinery adjacent to Suncor's refinery in Commerce City, Colorado, just outside of Denver.

Suncor Energy (U.S.A.) Inc. yesterday purchased the Colorado Refining Company, an indirect wholly-owned subsidiary of Valero. The purchase price was US$30 million (CDN$37 million) plus working capital and associated oil and product inventory. Colorado Refining Company's principal assets are Valero's Commerce City refinery and a products terminal located in Grand Junction, Colorado. The purchase is not subject to regulatory approval.

The 30,000 barrel per day (bpd) refinery is located next to Suncor's existing refinery, which was acquired in 2003. Suncor intends to fully integrate the two operations, providing a combined refining capacity of approximately 90,000 bpd.

With the purchase, Suncor is assuming Valero's 140 employees and the existing contract with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International (USW) Union, Local 5-477. Suncor will continue to provide refined products to retail customers through Phillips 66 service stations in Colorado and to commercial customers throughout the U.S. Rocky Mountain region.

"This acquisition provides an immediate expansion of our presence in the Rocky Mountain marketplace," said Rick George, Suncor's president and chief executive officer. "With a capacity of 90,000 barrels per day, the integrated operation is expected to be more competitive with refineries in Texas and Oklahoma."

Valero's chairman and chief executive officer Bill Greehey added, "These two plants belong together under one company because they are much stronger and have a much brighter future together than either has individually. In addition to Suncor providing employees with compensation and benefits programs comparable to ours, the integration of these operations will provide greater opportunities for growth and a brighter future."

Suncor, which operates an oil sands production facility in northern Alberta, Canada, has long-term plans that include integrating its growing crude oil production into the U.S. energy market through investments in refining assets. However, local crude oil suppliers currently providing feedstock to the Valero refinery would not be affected by the transaction.

"With a target to increase our oil sands production to more than a half million barrels per day, building stable access to strategic markets is a key part of our long-term growth strategy," said George.

Suncor will continue seeking additional downstream integration opportunities as part of its growth strategy. Such opportunities could include long-term contracts, joint ventures and the potential purchase of further refining assets or the expansion of Suncor's existing assets.

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