HollyFrontier buys Shell's Puget Sound refinery for $350 million

New York — HollyFrontier will pay $350 million for Shell's 145,000 b/d Puget Sound refinery in Washington state, acquiring its first US West Coast refinery.

"We believe that the Puget Sound refinery will complement our existing refining business, with sales into premium product markets and advantaged access to Canadian crude," said Mike Jennings, HollyFrontier's CEO, in a May 4 statement.

HollyFrontier will pay $350 million for the plant, and the hydrocarbon inventory to be valued at closing, which has a current value of between $150 million and $180 million.

The deal will be funded by cash and a one-year suspension of the dividend, as authorized by HollyFrontier's Board of Directors.

The refinery is located in Anacortes, Washington, and has 25,300 b/d of delayed coking capacity and 57,900 b/d of fluid catalytic cracking capacity, according to the US Energy Information Administration.

Subject to normal regulatory procedures, the deal is expected to close in the fourth quarter of 2021.

The state of Washington recently passed a low-carbon fuel standard bill and cap-and-trade system, which will go into effect January 2023. They are the second state after California to create a market of low carbon fuel credits for renewable fuels like diesel and sustainable aviation fuel, which increases the value of renewable fuels.

HollyFrontier is in the process of converting its former hydrocarbon refinery in Cheyenne, Wyoming, to a renewable diesel facility.