Exhibit 99
NEWS RELEASE
THE PREMCOR REFINING GROUP INC.
Premier People,
Products and Services
8182 Maryland Avenue
Suite 600
St. Louis, Missouri 63105
314-854-9696
314-854-1580 fax
Contacts:
Jim Joyce Jim Carter
Director, Corporate Communications Investor Relations
(888) 294-2030 (800) 622-0939
(314) 854-1511 (314) 854-1424
[email protected] [email protected]
PREMCOR TO CLOSE BLUE ISLAND REFINERY
ST. LOUIS, January 17, 2001 - Premcor Inc. announced today that it will
permanently close its Blue Island, Illinois refinery at the end of the month.
Although refining operations will cease, the company will continue to operate
its petroleum products storage facility directly adjacent to the refinery site.
"At Premcor refineries throughout the country, we are focusing our
operations to meet the requirements of the next wave of low-sulfur,
cleaner-burning fuels. Despite the investment by Premcor of approximately $70
million over the past five years at Blue Island, the refinery, as currently
configured and operated within our refining network, does not generate a return
sufficient for us to justify the additional investment," said William C.
Rusnack, president and CEO of Premcor. "In the end, we have determined the right
choice for Premcor is to focus our planning on higher return projects at our
other three refineries."
"Premcor remains committed to its core business - crude oil refining - at
its three other refineries in the central United States," Rusnack said. "As with
all prudent operators, Premcor's management continues to work on the engineering
cost estimates for the upgrades necessary to achieve compliance with the new
federal regulations requiring low-sulfur fuels. At the same time, we remain
focused on our aggressive growth strategy, as we complete the final phase of an
$835 million heavy oil upgrade expansion project at our Port Arthur, Texas
refinery."
"The decision to close the Blue Island refinery is an extremely difficult
one because the refinery has been a part of the community for more than 50
years," Rusnack said. "Many of our employees have lived in this area and worked
at the refinery for decades. However, continuing operations at Blue Island is
just not cost-effective for Premcor."
Rusnack announced the closing to its 297 employees at Blue Island during a
meeting at the refinery Wednesday morning. Premcor will offer outplacement
services and separation packages to affected employees to assist them in their
transition. Beginning immediately, Premcor will begin discussions with the
Paper, Allied-Industrial, Chemical and Energy Workers International Union
(P.A.C.E.) representatives regarding the effect of the refinery's closure on the
hourly work force.
"Premcor has had discussions with several parties who may have an interest
in buying the refinery. None of those parties has yet put forward an acceptable
offer to purchase the refinery," Rusnack said. "Premcor will consider serious
proposals from credible buyers, but will continue with the shutdown process
unless it receives an acceptable offer."
Premcor will comply with all regulatory guidelines to ensure that the
refinery closing is completed safely and efficiently. Premcor has a transition
team in place to oversee the careful process of taking the refinery out of
service and keeping local authorities and regulatory officials apprised as work
progresses at the refinery.
Closure of the refinery will result in The Premcor Refining Group Inc., a
subsidiary of Premcor USA Inc., taking a pretax charge to earnings of
approximately $150 million in the first quarter of 2001. This charge includes
asset write-downs approximating $100 million, in addition to accruals for
employee severance, environmental remediation and other exit costs. The actual
expenditures for these items will occur over several years. The Premcor Refining
Group Inc. has amended its working capital facility in order to remain in full
compliance with the terms of the facility.
Upgrades to refineries across the United States will be necessary because
of new fuel regulations requiring that all gasoline and diesel fuel be
reformulated to reduce sulfur content. The American Petroleum Institute
estimates that these upgrades will cost refineries across the United States $8
billion over the next decade. Premcor supports continued air quality
improvements and is working to meet the demand for reformulated fuels at its
other three refineries through expansions and upgrades.
Premcor Inc., parent of Premcor USA Inc., is based in St. Louis and
operates four refineries in the central United States with 565,000 barrels per
day of total crude oil throughput capacity. Premcor Inc. is also 90 percent
owner of Port Arthur Coker Company L.P. The company was renamed Premcor Inc. in
May 2000 after the Clark retail gas stations were sold in 1999.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, including Premcor
Inc.'s current expectations with respect to its Blue Island refinery. Words such
as "expects," "intends," "plans," "projects," "believes," "estimates," "will,"
and similar expressions typically identify such forward-looking statements. Even
though Premcor Inc. believes the expectations reflected in such forward-looking
statements are based on reasonable assumptions, it can give no assurance that
its expectations will be attained. Factors that could cause actual results to
differ materially from expectations include, but are not limited to,
opportunities for disposition, required capital expenditures, operational
changes, varying market conditions, government regulations and other factors
contained from time to time in the reports filed with the Securities and
Exchange Commission by the Port Arthur Coker Company L.P., Premcor Inc. and The
Premcor Refining Group's parent, Premcor USA Inc. including quarterly reports on
Form 10-Q, reports on Form 8-K, and annual reports on Form 10-K.
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