Following a series of explosions and a catastrophic fire that took days to extinguish, Philadelphia Energy Solutions — the largest oil refinery on the East Coast — is shuttering its South Philadelphia facility in two weeks, laying off more than 1,000 employees and causing gasoline futures to spike.
Here’s what you need to know about the refinery closure.
Shut down expected by July 12: Philadelphia Energy Solutions will close its doors permanently, officials announced Wednesday. The refinery is expected to close by July 12, according to Councilman Kenyatta Johnson, who represents the district where it sits. The 335,000-barrel-per-day refinery, the largest on the East Coast, employs more than a thousand people directly, including nearly 700 hourly union workers, and thousands of contractors. Just a year after emerging from bankruptcy, the cash-strapped oil refinery was already facing financial woes before Friday’s three-alarm fire swept through the facility. The Inquirer previously reported that the cost of repairing damages from the inferno could push owners to the financial brink. In a statement Wednesday, PES said the company “will position the refinery complex for a sale and restart.”
Thousands of jobs lost: The plant employs nearly 1,000 people directly, and thousands of specialized contract workers, such as pipefitters and steamfitters, who work on the refinery’s complex processing units. State law requires 60-day notice of layoffs, but emergency circumstances may allow the company to override the obligation, labor leaders said. As closure rumors swirled, workers said they felt they were the last to find out about the refinery’s plans to shut down. Some employees were let go immediately, effective Monday, with no severance pay, and paid unused vacation time.
Economic impact: Closing the South Philadelphia refinery would have a huge impact on the Philadelphia economy and on regional fuel markets. In a statement, Mayor Jim Kenney said the city was committed to helping the workforce, and would “immediately convene a group of city and quasi-governmental organizations to discuss the economic and employment impacts, and what the city is able to do in response.”
Environmental impact: The South Philadelphia fossil fuel refinery is the city’s biggest single polluter, and has long been a thorn in the side of environmentalists and neighbors who say it is a health risk. Located just off the Schuylkill River, the plant’s closure could lead to profound environmental issues for the city, state Department of Environmental Protection, and likely the U.S. Environmental Protection Agency. Converting the facility to anything besides an oil refinery could take years.
Gas prices rise: Spot market wholesale gasoline prices in the New York Harbor surged after news of the closing. AAA reported Friday morning that prices at the pump were up 3 cents to $2.91 in Southeastern Pennsylvania; 4 cents in New Jersey to $2.70; and 3 cents in Delaware to $2.54. Processing 335,000 barrels of crude oil a day — about 14 million gallons — PES is a key supplier to the New York market.
Rescue attempt: Philip Rinaldi, the refinery’s former chief executive, is talking to stakeholders about rescuing the plant, according to former U.S. Rep. Bob Brady, who was instrumental organizing the plant’s 2012 sale by Sunoco Inc. to stave off a threatened closure. Rinaldi, who retired in 2017, confirmed he was engaged in “exploratory meetings."
What will happen to the Philadelphia Energy Solutions refinery?
In a statement Wednesday, the company announced plans to prepare the South Philadelphia plant for sale, though it was unclear if there are any potential buyers, or what a buyer would do with the facility.
At 1,400 acres, PES is the largest refining complex on the eastern seaboard, with extensive infrastructure that would be valuable to other energy-related enterprises.
And while environmentalists dream of converting the refinery to a renewable energy facility, preparing the plant for anything but processing fossil fuels could take years.
A long history of refining, a long history of fires
Before it was known as PES, the South Philadelphia complex has a long history as an oil refining site. The Atlantic Refining Co. first opened for business in 1870 at Point Breeze. The Gulf Oil Corp. opened the second site at Girard Point in 1926. Sunoco, then under different ownership, acquired both plants in 1988 and 1994. Then, in 2012, Sunoco formed a joint venture with private-equity Carlyle Group. The joint venture declared bankruptcy in January 2018, and completed the $635 million financial restructuring Aug. 7. The refinery also has a history of explosions and fires going back decades.
The fire at the Philadelphia Energy Solutions refinery
Questions about the fate of the refinery emerged immediately after an explosion followed by two others rocked the PES refinery next to the Platt Bridge in South Philadelphia about 4 a.m. Friday, triggering a massive fire and sparking fears of an airborne toxic event. The explosion’s fireball was so intense and hot it was captured by a weather satellite in space. Five refinery workers suffered minor injuries. The estimated price tag for replacing the unit in the fire was pegged at $100 million.
Officials have said since the fire that the air quality in the area of the refinery remained safe. On Tuesday, Kenney said there was no lingering health threat.
Investigations into the cause of the explosion and related safety issues began Monday. No cause has yet been determined by four investigators from the U.S. Chemical Safety and Hazard Investigation Board at the scene, officials said Thursday. Events began around 4 a.m. June 21, when hydrocarbon vapors were released in the alkylation unit that converts crude oil, said Kristen Kulinowski, interim executive for the independent agency. Calling the explosion a “fundamental failure in the system,” Kulinowski said the investigation has been impeded by the extent of the damage to the site, describing the plant as “a lot of twisted metal and a lot of debris that had been scattered across a large area.”
Other agencies conducting investigations include the U.S. Occupational Safety and Health Administration (work safety), and both the federal Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Philadelphia Fire Marshal’s Office (cause of explosions and fire). The city also had assigned a task force to explore the cause of the fire and what steps might be needed to improve safety at the complex.
Staff writers Andrew Maykuth, Frank Kummer, and Claudia Vargas contributed to this report.