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Groundwater decontamination from Valero refinery involving Motiva Enterprises to cost tens of millions

Valero refinery likely to be torn down in Delaware City

Sale rumors swirl, but refinery says without a deal, plant will be demolished

By JEFF MONTGOMERY: The News Journal January 10, 2010

Rumors circulated as recently as last week that European refiner Petroplus was interested in the site. Representatives of Petroplus have inspected the 210,000 barrel per day Delaware plant, officials said, but no buyers have surfaced.

Bill Day, a company spokesman in San Antonio termed Delaware City’s closing permanent and said this week’s announcement of a Shell refinery closing in Montreal tends to back claims that the East Coast still has what industry officials and analysts view as a refining surplus.

“Some time over the next several months, probably during calendar year 2010, dismantling of the refinery units will begin — dismantling or otherwise disposing of them,” Day said. “The shutdown is permanent; that has not changed.”

Valero announced that it is closing the Delaware City site in November, blaming high operating and maintenance costs, low demand and unfavorable prices for the kind of heavy, high sulfur crude oil handled by the plant. That move came just weeks after Sunoco announced the closing of its Eagle Point on the Delaware River near Philadelphia.

State officials described the local shutdown and loss of hundreds of jobs as a serious blow to the state’s economy, and recently said they had urged Valero to keep the site standing and available for sale for another year.

Alan Levin, director of the Delaware Economic Development Office, said Friday that state officials haven’t given up on restoring the jobs and production. He said he was aware of rumors about Petroplus, a company whose top managers once led Premcor, Delaware City’s previous owners.

“We’re still optimistic and hopeful that we can turn this around, but we don’t have anything tangible at this time,” Levin said. He added that state officials aren’t pursuing any alternatives beyond a takeover by another refiner and “putting those people back to work.”

“We’re not there yet,” Levin said. “We haven’t thrown in the towel.”

William Coleman, a New Castle resident who worked at the refinery as a boilermaker and contract company manager, said the shutdown has been difficult for the plant’s work force. About 550 full-time Valero employees and hundreds of contractors were on the payroll at the time of the shutdown.

“I think people are hopeful, but there’s a little despondency mixed in,” Coleman said. “Hope springs eternal.”

David Small, the Department of Natural Resources and Environmental Control’s deputy secretary, said state and refinery officials continue to meet to discuss shutdown and cleanup plans.

Costs for containing and cleaning up soil and groundwater alone are likely to run into the “tens of millions,” Small said. Motiva Enterprises, a joint venture of Shell and Saudi Arabia’s national oil company, is responsible for most of the groundwater cleanup.

“We’re still waiting on a longer-term plan from Valero on decommissioning the plant, taking it down to grade [the ground] if, in fact, that’s where things end up going,” Small said.

The refining company still plans to operate its distribution terminal and tank farm on the east side of Del. 9, Day said. Both crude oil and refined products will be stored and shipped through the terminal.

Contact Jeff Montgomery at 678-4277 or [email protected].

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