Par Pacific, through an indirect subsidiary, will acquire certain refining units from Hawaii-based Island Energy Services (IES) in the US state of Hawaii for $45m plus additional amounts for certain hydrocarbon and non-hydrocarbon inventory.
The transaction marks the exit from refining operations for Island Energy Services in a move to shift its focus to dedicated logistics and retail operations.
The refining units involved in the transaction are located near Par Pacific’s Kapolei refinery.
The Houston-based Par Pacific plans to use the acquired refinery units to supplement its current operations in supplying Island Energy Services. This will be done to ensure that the Hawaiian company fulfills its existing contractual obligations with Hawaiian Electric, Maui Electric, Kauai Island Utility Cooperative and Hawaii Electric Light.
Par Pacific president and CEO William Pate said: “We believe this transaction will prevent any disruption to the supply of fuel to meet Hawaii’s electric generation needs.
“The closure of one of Hawaii’s refineries was anticipated in 2014 by the governor’s Hawaii Refinery Task Force. As the owner and operator of Hawaii’s remaining refinery, we recognize our role in meeting the essential demand for petroleum products today and to ensure continuity and a smooth and practical transition to Hawaii’s clean energy future.”
Par Pacific and Island Energy Services will also enter into a long-term agreement under which the former will use the Hawaiian firm’s logistics assets for the storage and throughput of crude oil and related products required for the operation of its newly acquired assets.
In connection with the acquisition, Par Pacific is likely to retain 65 employees of Island Energy Services and could hire another 20 employees at its Kapolei refinery in conjunction with the new downstream investment.
Island Energy Services CEO Jon Mauer said: “We recognize the impact this transaction will have on all of our employees and we are committed to supporting each of them during this transformation of the business.
“Our immediate and long-term focus is to continue to reliably service our customers, both through this transition and beyond. This shift in operations better positions IES as an integrated logistics provider, anchored by our large-scale Kapolei import terminal.”
The acquisition, which will be subject to certain closing conditions, is anticipated to be completed by the end of the fourth quarter.