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Sources: Calumet may sell Superior refinery

Superior Telegram photo

The Calumet oil refinery in Superior, the city's single largest employer and taxpayer, may be put up for sale, sources told Reuters this week.

The refinery, which Calumet has owned since 2011, directly employs 185 people with another 80 to 120 private contractors at the facility on a typical day, company officials told the News Tribune last year.

It's not clear when the sale might occur or who might buy it, although Reuters, quoting unnamed sources, speculated that Par Pacific Holdings, HollyFrontier and Suncor Energy may be interested, listing the value of the refinery as high as $500 million.

"We have no comment on any (sale) speculation at this point whatsoever," Joe Caminiti, an investor relations spokesman for Calumet, told the News Tribune on Friday.

Local refinery officials did not return requests for more information on the potential sale.

Calumet, which was building and acquiring refineries just five years ago, more recently has been shedding assets not related to producing specialty chemicals products. It recently sold its stake in the Dakota Prairie diesel refinery near Dickinson, N.D. The Dickinson Press reported that Calumet sold its share for a loss to Tesoro as a glut of cheap oil damaged refinery profits and as demand for diesel fuel in the Dakota oil fields declined.

The Superior refinery opened under the Lake Superior Refining Co. name in 1950 and had been under the Murphy name since 1958 before Murphy got out of the refinery business in 2011. Calumet acquired the refinery and "associated operating assets and inventories" for $475 million, including $214 million for the refinery itself. In the deal, Calumet acquired Murphy Oil's marine terminal in Duluth, byproducts terminal in Esko and asphalt terminals in Crookston, Minn., and Rhinelander, Wis.

The Superior refinery, the city's biggest industrial facility with a $100 million economic impact in 2010, has a capacity of up to 45,000 barrels per day.

While the refinery was small for Murphy and compared to others nationwide, it is among Calumet's largest facilities. Calumet produces more than 1,000 specialty hydrocarbon (made from oil) products such as lubricating and mineral oils, solvents, gels and waxes used by 2,600 companies for consumer products — including the oil that makes WD-40 and the wax for Chapstick lip balm. The company also produces gasoline, jet fuels and asphalt.

The Superior refinery currently produces gasoline, distillate, asphalt and specialty petroleum products that are marketed in the Midwest.

Calumet is headquartered in Indianapolis and, in addition to the Superior refinery and Twin Ports terminal facilities, owns facilities in Illinois, Louisiana, Missouri, Montana, New Jersey, Oklahoma, Pennsylvania and Texas.

Calumet has retained Tudor, Pickering, Holt & Co to advise on a possible transaction, the sources told Reuters.

The company plans to upgrade the Superior refinery starting this year, spending as much as $20 million for improvements that are expected by the first half of 2018. The work is focused on optimizing product yields and overall performance at the refinery, a company official said in a conference call with investors last month.

Last November, Calumet submitted a permit application to the Wisconsin Department of Natural Resources, seeking permission to move ahead with the improvements. Refinery manager Kollin Schade told the News Tribune at the time that while most of Calumet's recent investments at the facility have focused on complying with new environmental regulations, the proposed project has a different thrust.

"From our perspective, it was time to really start looking at projects that could help improve the flexibility and the competitiveness of the refinery," he said.

"Since 2004, we've invested over $100 million in environmental compliance at this facility," said Mark Darby, the refinery's environmental manager, told the News Tribune in November.

"But at some point you need to have an offset for those additional costs, and this is the first project since my tenure here, where people have come to the facility and identified a project that really improves the viability and the future of this facility. So we're very excited to have that project come to us," Darby said.

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