Shell strikes deal to sell Mobile plant, shedding more US refining assets

Shell on May 27 said it reached an agreement to sell its 90,000 b/d Mobile, Alabama, refinery to Vertex Energy Operating LLC for $75 million, marking its third refinery sale in a month.

These divestments are part of the global major's push to lower its carbon footprint. Shell has stated goals to reduce carbon intensity by 20% by 2030 and 45% in 2035 from its 2016 baseline by shedding global refinery capacity and focusing on facilities with associated chemical plants.

However, a May 26 decision by the Hague, Netherlands, district court is forcing Anglo-Dutch Shell to accelerate carbon intensity reduction to 45% by 2030, a decision Shell said it will appeal.

The implementation of tighter carbon emissions allowances in Europe's Emissions Trading Systems, which came into effect in 2021, have added emission credit incentives for the refinery sales.

"The sale of the Mobile refinery shows that we are making good progress delivering on our manufacturing strategy," said Robin Mooldijk, Shell's executive vice president for Manufacturing.

One US refinery left

Over the past month, Shell has sold three refineries as it moves to focus on producing more low-carbon fuels and specialty chemicals, leaving it with just one plant – the 227,400 b/d Norco, Louisiana, refinery.

Besides the refinery, the Vertex deal for the Mobile plant includes associated logistical infrastructure, including product racks, an associated dock and the Blakeley Island Terminal.

The refinery produces LPG, diesel, jet and gasoline as well as low-sulfur VGO, heavy olefin Feed and benzene. It can run as stand-alone refinery, produce base oils or chemicals feedstock.

Vertex will pay $75 million in cash plus the value of the hydrocarbon inventory. Vertex is one of the largest processers of used motor oil and a base oil supplier to the lubricant industry.

This transaction is expected to close in Q4 2021, subject to regulatory approvals.

Previous sales

On May 4, Shell sold its 145,000 b/d Puget Sound refinery in Anacortes, Washington, to HollyFrontier for $350 million plus between $150 million and $180 million of inventory. The deal also is expected to close in Q4 2021.

On May 24, Shell sold its half share in the 318,000 b/d Deer Park, Texas, refinery, to co-owner Mexico's Pemex for $594 million, after an unsolicited offer from the state oil company. The cash-and-debt deal does not include the value of the hydrocarbon inventory which will be factored in. The deal is also expected to close in Q4 2021.

Shell already sold in February 2020, its 156,400 b/d Martinez, California, refinery to PBF Energy for $960 million plus hydrocarbon inventory value.

And late last year, it shuttered its 211,146 b/d Convent, Louisiana, refinery and subsequently rebuffed two offers for the plant from American Clean Energy Refining, LLC saying their offer was not viable, according to ACER principal George Dabbs.

A Shell spokesman said May 27 the company is still "actively evaluating options for the site, including potential additional future marketing efforts or retention of the idled asset."