* Repairs expected to be completed quickly
* CDU repairs not seen impacting Carlyle's decision
By Jeffrey Kerr and Janet McGurty
NEW YORK, May 10 Sunoco Inc worked to
quickly restore production at one of four key crude units at its
Philadelphia refinery on Thursday, while analysts considered
what impact this week's small fire may have on advanced talks to
sell the plant.
The CDU at Sunoco's 355,000 barrels-per-day refinery will
likely restart within one or two days after a hole due to
corrosion was discovered following a brief fire on Wednesday, a
source familiar with the situation told Reuters on Thursday.
A Sunoco spokesman declined to comment on Thursday.
While small flares like the one that forced operators to
shut the unit are not unusual at refineries, the incident comes
at a delicate time as Sunoco is in the final stretch of talks to
sell the aging plant -- the largest on the East Coast -- to
private equity firm Carlyle Group.
Since those negotiations were made public a month ago, two
others deals have emerged that would revive mothballed
refineries in Pennsylvania and the Caribbean, threatening to
stymie an expected recovery in Atlantic Basin refinery margins.
"The fire didn't appear to be serious from what I've heard
and if that is correct, I wouldn't think it (by itself) would
normally cause the deal to be scuttled," said John Auers,
refinery expert with Houston-based Turner Mason.
ConocoPhillips' recent deal to sell its 185,000 bpd
refinery in neighboring Trainer to Delta Airlines had already
cast a new light on the Carlyle sale, he said. Earlier this week
Reuters reported that PetroChina Co Ltd was
in talks to buy Valero Energy's shuttered 235,000 bpd
refinery in Aruba.
"Considering that, there is always the possibility that
something like this fire could become 'the straw that broke the
camel's back,' especially if reliability issues were of some
concern anyway," Auers added.
The hole in the Philadelphia refinery CDU was being repaired
and scaffolding was built to allow the inspectors in to look at
the unit, said the source.
The fire was extinguished in the CDU early Wednesday
morning. Other units continued to operate.
"Equipment wears out and needs to be replaced. It is part of
owning a refinery. This should be tangential" to the talks with
Carlyle Group, said Mark Routt, senior consultant at energy
advisor Houston-KBC Advanced Technologies.
On Wednesday, a spokesman for Sunoco said as far he knew the
two parties were still talking.
The Philadelphia plant will be closed by the end of July if
a deal is not reached as Sunoco exits the refining business to
focus on terminals and pipeline.
The refinery, which lacks the sophisticated downstream
capacity to process heavy, sour crude streams into high value
gasoline and diesel, turned to high-acid crude oils in recent
years in an attempt to boost refining margins, said traders and
Among the pitfalls of running high-acid crude streams
through the CDU are metal fatigue and corrosion, requiring more
Discussions between Carlyle and Sunoco have included issues
of reliability since the pact was agreed upon, a source said.
Discussions with the Environmental Protection Agency (EPA) and
federal and local government were also ongoing.
Strong support by local and federal legislators like Sen.
Bob Casey and Governor Tom Corbett have been instrumental in
working to keep the refineries operating, savings job and
bolstering supply security in the region.