21 June, Philadelphia PA – City fire officials believe the fire started in a butane vat around 4 a.m. EDT. The flames and explosions destroyed a 30,000-bpd alkylation unit that uses hydrofluoric acid to process refined products. The acid was saved from the fire, preventing a potential acid vapor cloud enveloping the densely-populated neighborhoods bordering the 1300-acre refinery complex. The fire was the second this month, and the latest in a decades-long history of operational mishaps and financial problems {Jarret Renshaw, Reuters, 23.June.2019}.

PES has been a center of petroleum-based activity since opening as a crude oil storage site in 1866. The surrounding neighborhoods grew up with the refinery to house workers and their families. PES, backed by the Carlyle Group, purchased controlling interest in the sprawling facility from Sunoco in 2012, placing a huge bet on then-cheap Bakken production.
Quadruple-down on CBR
PES built-out the massive $130 million North Yard rail terminal to receive four 120-car unit trains per day off the CSX Philadelphia Subdivision. The major components of the North Yard terminal include 6.4 miles of track, 1.0 mile of additional track with rights-of-way on adjacent land, two 4,000 foot, 24-inch underground pipeline manifolds, a 20,000 barrel per hour pumping station, 1,500 feet of 24-inch pipeline and a custody transfer meter station. Processing of domestic crude peaked at 235,000 barrels per day in December, 2014 {PES Logistics IPO Prospectus 17.Feb.2015}.
Philadelphia, PA


In early 2015, the company launched an IPO for the spun-off North Yard Logistics operation, and a few other non-core assets. Soon after, the Obama administration lifted the 1977 crude oil export ban, opening global markets for Bakken crude to be loaded on ships at Great Lakes ports. Global crude prices tumbled around then, mitigating PES’s domestic sourcing advantage. The IPO was withdrawn. In 2017, The Dakota Access Pipeline went into service, eliminating the value of the railhead. In January 2018, PES filed for Chapter 11 bankruptcy. The terms of the reorganization limited the facility’s maintenance and upgrade budget.
Major source of East Coast fuel products
PES produced unbranded gasoline (87, 89 and 93 octane), jet fuel, petrochemicals, liquefied petroleum gas and sulfur. PES also produced a variety of diesels, including ultra-low-sulfur diesel, non-road, heating oil, locomotive/marine and non-jet kerosene. Products are additized and available in winter blends. {PES website}
Despite its size, fuel markets did not react strongly to the explosion, or management’s decision to permanently shut the facility. It was a poor performer among the nation’s refinery fleet, with a complexity factor1 rating of 9.0, below the 10.56 national average, and a conversion ratio2 of 39.92, below the national average of 43.93. Compared to more complex refineries, PES is limited to catalytic cracking, and does not apply catalytic hydrocracking or thermal cracking technologies that enhance a plant’s ability to convert low-value feedstock into high quality product, leaving PES reliant on high-quality/ high-cost feedstock.