Murphy Oil puts Superior refinery up for sale

Talk about it

News that Murphy Oil Corp. is making plans to sell its refineries, including one in Superior, came as a surprise to local officials late Thursday.

Thursday night and today, local officials were already formulating plans to assist whatever buyer may come forward as Murphy Oil turns its focus to its exploration operations and retail businesses.

Murphy Oil issued a news release Thursday night announcing plans to sell its refineries in Superior, Mereaux, La., and Milford Haven, Wales, as well as its retail system in the United Kingdom. The goal is to complete the sale in the first quarter of 2011.

“The refining assets are really marginal in size within Murphy Oil’s worldwide portfolio and are no longer strategic for us,” said David Wood, Murphy Oil president and chief executive officer during an early morning conference call today. “In 2009, these businesses contributed just $4.2 million or 0.5 percent to our bottom line. Upon closing of the sale, Murphy will emerge a stronger, more focused company.”

The announcement does raise concerns for local officials who are assembling a team of business and government leaders to monitor and assist in the sale and to protect employee’s interests through the process.

“We really want to make sure that we stay on top of what’s happening at Murphy Oil,” Mayor Dave Ross said. “One of our main concerns is the employees. The refinery is a valuable asset to our community; they’ve been a great civic partner.”

Murphy Oil employs about 156 people at its Superior refinery and contributes about $100 million in salaries and services to the local economy, and refinery manager Dave Podratz sees that continuing well into the future.

Podratz said he didn’t know much more about the Murphy Oil’s plans than company officials released. But he isn’t too concerned about the future of the Superior refinery.

When someone’s been around the refining business a long time, refineries are bought out and there’s just a different name on the coveralls, Podratz said today. He said the first refinery he ever worked for 30 years ago was bought out and people he worked with then are still on the job.

“Any time a major change involving one of our largest employers is announced it raises concerns,” said Douglas County Board Chairman Doug Finn. “We are in the information gathering stage right now to determine what the impact Murphy’s decision to sell the refinery will have on Superior and on Douglas County as a whole.”

Development and Government Affairs Director Jeff Vito said the first indication he had of the decision by the Murphy Oil board of directors to sell the refining operations was Thursday night, when he received an e-mail after 8 p.m.

“In talking with an employee at Murphy Oil today, they had no indication – the first they heard was when this e-mail came out last night,” Vito said.

After listening to a Web cast of the announcement this morning, Vito said he was concerned, but not alarmed by the decision.

Wood said the company had received inquiries concerning its refining operations before the decision to sell was made.

“I took out of that session this morning that they’ve been talking to some interested parties already,” Vito said. “They are probably pretty far down that path would be my guess if they’re going to try to get this thing completed by the first quarter of ’11. But I’m looking at it that this could be a real opportunity for this refinery.”

After all, the company had considered a nearly seven-fold expansion of the Superior facility within the last few years, a proposed expansion that ended because Murphy Oil couldn’t find a partner necessary to secure an oil supply. According to the interim manager, Jim Kowitz, who served at the Superior refinery in 2008, when Murphy Oil ended exploration of the expansion, the project would have cost the company half its capitalized value.

A company the size of Murphy Oil faces significant challenges to put together the capital for a major expansion, Vito said. A company larger than Murphy would have a better ability to put that package together.

Vito said the Superior refinery is a strong candidate for that type of expansion because of its location and less volatile weather conditions experienced by refineries in the south.

“A lot of the work they [Murphy Oil] has done to go down that path could be very attractive to a company,” Vito said.

While the Superior refinery is the smallest of the three, Murphy Oil has continued to invest in the facility, spending about $100 million over the last few years, Ross said. Last year, the company launched a $50 million project to meet changing environmental standards for fuel.

“Although we are sad to hear of the company’s decision to sell the Superior refinery, we will do whatever we can to assist Murphy in finding a buyer,” Finn said. “Whoever purchases the refinery will inherent a skilled and dedicated workforce in a community that has been very supportive of business.”

State Sen. Bob Jauch, D-Poplar, said it’s very important that the community doesn’t overreact to the announcement. After all, it’s a very stable, modernized and regionally significant asset.

“We’ve gotten used to a company that has treated the community very, very well,” Jauch said. And he’s optimistic that whatever company buys the refinery will recognize the area has a good workforce and a modern, updated facility that provides a vital resource for the nation.

Tags: douglas county, murphy oil, news, business, superior, oil, petroleum, refinery