Riverstone unit looks to sell Washington state oil refinery - sources

Riverstone Holdings

08/03/2018 16:31

By David French and Jessica Resnick-Ault
    HOUSTON, March 8 (Reuters) - TrailStone Group, a start-up
commodity merchant backed by private equity firm Riverstone
Holdings LLC, has retained Tudor Pickering & Holt to sell or
find strategic alternatives for its Tacoma, Washington refinery,
two people familiar with the transaction said on Thursday. 
    The refinery, known as U.S. Oil, needs a capital infusion to
pursue additional projects, including plans to expand into
renewable energy, one of the people said. 
    "We hope to identify a partner/investor with significantly
added liquidity and capital willing to embrace all that we have
and protect and maintain our approach while also competing
effectively in a very dynamic, rapidly-changing energy economy,"
Marcia Nielsen, a refinery spokeswoman, said in response to
questions from Reuters. 
    TrailStone bought the 42,000 barrel-per-day refinery in
Tacoma, Washington for an undisclosed amount in 2014, and did
not reveal how much it hoped to gain from a sale. The plant
could fetch more than $500 million in an outright sale, one of
the people said. The refinery has a dedicated jet fuel pipeline
to Joint Base Lewis-McChord, a U.S. military installation close
to the plant. 
    Refineries on the West and East Coasts benefited for several
years from a deep discount on railing oil out of North Dakota's
Bakken shale play, but oil markets have shifted since
TrailStone's purchase of the refinery. 
    In the past six months TrailStone has downsized its U.S. and
European offices, letting go of 20 people in its offices in
Austin, London and other locations, representing about 15
percent of its global headcount.  urn:newsml:reuters.com:*:nL2N1LI1JF
    TrailStone officials did not immediately respond to requests
for comment.
    TrailStone first entered North American physical oil markets
with the June 2014 purchase of the small refinery and logistics
firm in the Pacific Northwest.
    The refinery also includes 2.7 million barrels of storage
capacity, a fleet of 630 rail cars, several barges, and a
deepwater terminal along the coast. It started receiving about
40,000 barrels of Bakken crude daily in November 2012 when its
offloading operation began. 
    Crude prices nationwide fell in the years after the purchase
due to new supply from U.S. shale formations. That eroded the
Bakken discount that made refining profitable for some refiners
that rely on rail transport. 
    The completion of several pipelines out of the Bakken region
has made the price of that oil more comparable to other grades.
Crude-by-rail volumes have plunged, as those pipelines now
connect the Bakken to lucrative markets in the Gulf and Midwest.
    

 (Reporting by David French and Jessica Resnick-Ault
Editing by Susan Thomas)
 ((Jessica.Resnick-Ault@thomsonreuters.com; 646-223-6052;))