Shell Reaches Agreement to Sell Bakersfield Refinery to Flying J subsidiary
Shell Oil Company (SOC) today announced that its Shell Oil Products US subsidiary has signed a definitive agreement to sell its Bakersfield Refinery, located in Bakersfield, California, to a wholly owned subsidiary of Flying J Inc.
The Bakersfield Refinery, which began production in 1932 as the 1,500 barrel per day Mohawk Refinery, is located in California's Central Valley and today has the capacity to refine up to 70,000 barrels of crude oil per day.
The sale is expected to close in the first quarter of 2005 after all regulatory approvals are obtained. Terms of the sale were not disclosed.
"We're pleased to reach this sale agreement, which we recognize is important to many people in Bakersfield and beyond," said Lynn Laverty Elsenhans, President of SOC. "While the facility is no longer strategic to Shell and does not meet our criteria for continued investment, Flying J sees an opportunity. With this sale, the refinery will continue to make gasoline and diesel for the California Central Valley and provide employment opportunities in the region."
Aamir Farid, General Manager of Shell's Bay-Valley Complex, comprising the Bakersfield refinery and Shell's Martinez, California refinery, said, "We're committed to working with our refinery employees to provide opportunities and options consistent with their preferences and employment goals. Flying J has advised us that they would like to retain a large portion of the workforce and will abide by the collective bargaining agreement. Shell employees who wish to remain at the refinery will be given the opportunity to discuss employment options available to them from Flying J."
Shell will continue to own and operate certain pipelines that serve the refinery. Shell also will continue to own the nearby Bakersfield Products Terminal, but Flying J will operate it under the terms of a long-term lease. Shell will have an off-take agreement to receive refined products from Flying J. Shell will continue to meet its supply obligations to branded customers and contracted diesel customers in the Central Valley through the Bakersfield Products Terminal and its West Coast supply network.
Shell remains committed to operating a safe and environmentally responsible facility until the transfer of the facility to Flying J is complete. Closing of the sale is contingent upon Flying J and Shell achieving an agreement with the Environmental Protection Agency and the Department of Justice regarding transfer of the Consent Decree obligations applicable to the Bakersfield Refinery. Additionally, Flying J intends to file with the San Joaquin Valley Air Pollution Control District a petition for variance to certain State of California obligations at the refinery and seek confirmation that the District would support such a variance.
Shell was advised by Credit Suisse First Boston LLC and by Fulbright & Jaworski L.L.P.
About Flying J Inc.
Flying J is a privately held company based in Ogden, Utah, and has the distinction of being ranked number 35 among Forbes' 500 Largest Private Companies in America with 2003 annual sales of $5.6 billion and 2004 projections to reach $7.5 billion. This fully integrated oil company is the largest retail distributor of diesel fuel in North America and employs over 12,500 people nationwide through its interstate operations, transportation, refining and supply, exploration and production, as well as its financial services and communications divisions.
