Profile: Sunoco, Inc. (SUN)

Sunoco, Inc. (Sunoco), incorporated in 1971, through its subsidiaries, is principally a petroleum refiner and marketer and chemicals manufacturer with interests in logistics and cokemaking. The Company’s petroleum refining and marketing operations include the manufacturing and marketing of a full range of petroleum products, including fuels, lubricants and some petrochemicals. Sunoco’s chemical operations comprise the manufacturing, distribution and marketing of commodity and intermediate petrochemicals. The petroleum refining and marketing, chemicals and logistics operations are conducted principally in the eastern half of the United States. Sunoco’s cokemaking operations are conducted in Virginia, Indiana, Ohio and Vitoria, Brazil. The Company’s operations are organized into five business segments: (Refining and Supply, Retail Marketing, Chemicals, Logistics and Coke) plus a holding company and a professional services group. The professional services group consists of a number of staff functions, including: finance; legal and risk management; materials management; human resources; information systems; health, environment and safety; facilities management; transaction processing, and government and public affairs. In September 2009, Superior Plus Corp announced that Superior Plus Energy Services LLC, its indirect wholly owned subsidiary, acquired certain assets, which make up a retail heating oil and propane distribution business (Sunoco Retail Heat) from Sunoco, Inc.

Sunoco owns and operates five refineries, which are located in Marcus Hook, Philadelphia, Westville, New Jersey, Toledo, Ohio and Tulsa, Oklahoma. The refineries in Marcus Hook, Philadelphia, Westville (also known as Eagle Point) and Toledo produce principally fuels and commodity petrochemicals while the refinery in Tulsa emphasizes lubricants production with related fuels production being sold in the wholesale market. Sunoco markets gasoline and middle distillates, and offers a range of convenience store merchandise through a network of 4,720 retail outlets in 26 states primarily on the East Coast and in the Midwest United States. It owns and operates facilities in Philadelphia, and Haverhill, Ohio, which produce phenol and acetone, and in LaPorte, Texas, Neal, West Virginia, Bayport, Texas and Marcus Hook, which produce polypropylene.

The Company owns, principally through Sunoco Logistics Partners L.P. (the Partnership) (a master limited partnership), a group of pipelines and terminal facilities, which transport, terminal and store refined products and crude oil. Sunoco has a 43 %t interest in the Partnership, which includes a 2 % general partnership interest. Sunoco, through SunCoke Energy, Inc. and its affiliates (individually and collectively, SunCoke Energy), makes blast-furnace coke at its facilities in East Chicago, Indiana (Indiana Harbor), Vansant, Virginia (Jewell) and Franklin Furnace, Ohio (Haverhill), and produces metallurgical coal from mines in Virginia primarily for use at the Jewell cokemaking facility. SunCoke Energy is also the operator and has an equity interest in a facility in Vitoria, Brazil (Vitoria).

Refining and Supply

The Refining and Supply business manufactures petroleum products, including gasoline, middle distillates (mainly jet fuel, heating oil and diesel fuel) and residual fuel oil as well as commodity petrochemicals, including olefins and their derivatives (ethylene, ethylene oxide polymers and refinery-grade propylene) and aromatics and their derivatives (benzene, cumene, cyclohexane, toluene and xylene) at the Marcus Hook, Philadelphia, Eagle Point and Toledo refineries, and sells these products to other Sunoco business units and to wholesale and industrial customers. This business also manufactures petroleum and lubricant products at the Tulsa refinery. The Company’s refinery operations are comprised of Northeast Refining (the Marcus Hook, Philadelphia and Eagle Point refineries) and MidContinent Refining (the Toledo and Tulsa refineries).

The Philadelphia, Marcus Hook and Eagle Point refineries process crude oils supplied from foreign sources. The Toledo refinery processes domestic and Canadian crude oils as well as crude oils supplied from other foreign sources. The Tulsa refinery processes domestic and foreign-sourced crude oils. The foreign crude oil processed at the Company’s Northeast refineries is delivered utilizing ocean-going tankers and coastal distribution tankers and barges that are owned and operated by third parties. Approximately 20 % of the Company’s ocean-going tanker marine transportation requirements pertaining to its Northeast Refining crude supply are met through time charters. Approximately 25 % of Sunoco’s crude oil supply during 2008 came from Nigeria.

Retail Marketing

The Retail Marketing business consists of the retail sale of gasoline and middle distillates and the operation of convenience stores in 26 states, primarily on the East Coast and in the Midwest region of the United States. The highest concentrations of outlets are located in Connecticut, Florida, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania and Virginia. Retail Marketing has a portfolio of outlets that differ in various ways including: product distribution to the outlets; site ownership and operation; and types of products and services provided.

Direct outlets may be operated by Sunoco or by an independent dealer, and are sites at which fuel products are delivered directly to the site by Sunoco trucks or by contract carriers. The Company or an independent dealer owns or leases the property. These sites may be traditional locations that sell almost exclusively fuel products under the Sunoco and Coastal brands or may include APlus convenience stores or Ultra Service Centers that provide automotive diagnostics and repair. Included among Retail Marketing’s outlets as of December 31, 2008, were 53 outlets on turnpikes and expressways in Pennsylvania, New Jersey, New York, Maryland and Delaware. Of these outlets, 37 were Company-operated sites providing gasoline, diesel fuel and convenience store merchandise. Distributor outlets are sites, in which the distributor takes delivery of fuel products at a terminal where branded products are available. Sunoco does not own, lease or operate these locations. Branded fuels sales (including middle distillates) averaged 325.1 thousand barrels per day in 2008. Sunoco’s APlus convenience stores are located principally in Florida, New York and Pennsylvania. These stores supplement sales of fuel products with a mix of merchandise, such as groceries, fast foods, beverages and tobacco products.

Chemicals

The Chemicals business manufactures, distributes and markets commodity and intermediate petrochemicals. The chemicals consist of aromatic derivatives (phenol, acetone, bisphenol-A, and other phenol derivatives) and polypropylene. Phenol and acetone are produced at facilities in Philadelphia, PA and Haverhill, OH; and polypropylene is produced at facilities in LaPorte, Texas, Neal, West Virginia, Bayport, Texas and Marcus Hook, Philadelphia. Sunoco’s Philadelphia phenol facility has the capacity to produce annually more than one billion pounds of phenol and 700 million pounds of acetone. Petrochemical products produced by the Chemicals business are distributed and sold on a worldwide basis with most of the sales made to customers in the United States.

Logistics

The Logistics business, which is conducted through Sunoco Logistics Partners, L.P., operates refined product and crude oil pipelines and terminals and conducts crude oil acquisition and marketing activities primarily in the Northeast, Midwest and South Central regions of the United States. The Logistics business also has an ownership interest in several refined product and crude oil pipeline joint ventures. Pipeline operations are primarily conducted through the Partnership’s pipelines and also through other pipelines, in which the Partnership has an ownership.

Refined product pipeline operations, located primarily in the Northeast, Midwest and South Central United States transport gasoline, jet fuel, diesel fuel, home heating oil and other products for Sunoco’s other businesses and for third-party integrated petroleum companies, independent refiners, independent marketers and distributors. Crude oil pipeline operations, located in Texas, Oklahoma and Michigan, transport foreign crude oil received at the Partnership’s Nederland, Texas and Marysville, Michigan terminals and crude oil produced primarily in Oklahoma and Texas to refiners (including Sunoco’s Tulsa and Toledo refineries) or to local trade points. At December 31, 2008, the Partnership owned and operated approximately 3,800 miles of crude oil pipelines and approximately 2,200 miles of refined product pipelines. In 2008, crude oil and refined product shipments on these pipelines totaled 24.5 and 17.2 billion barrel miles, respectively.

Coke

SunCoke Energy, Inc., through its affiliates (individually and collectively, SunCoke Energy), operates metallurgical coke plants located in East Chicago, Indiana (Indiana Harbor), Vansant, Virginia (Jewell) and Franklin Furnace, Ohio (Haverhill) and metallurgical coal mines located in Virginia. SunCoke Energy is also the operator of a plant in Vitoria, Brazil. Aggregate coke production capacity from the plants in the United States approximates 3.02 million tons per year, while production capacity from the Vitoria facility approximates 1.7 million tons per year. SunCoke Energy is also supplying ArcelorMittal with approximately 700 thousand tons per year of coke from the Jewell operation.