Shell returns as oil refiner following complex changes

Company continues contributions to benefit community

by R.W. Clever

Shell is back in Anacortes although it never really left. For many people the changes may seem to have happened in a whirlwind.

A shuffle of ownership and signage has left Shell Products U.S. with 100 percent ownership of the old Texaco refinery on Fidalgo Bay, next door to its former facility, now owned and operated by Tesoro Petroleum.

Happily, the bottom line is that the more than 400 employees at the refinery keep their jobs and will likely remain employed for the foreseeable future. Significant job growth at the facility, though, is unlikely for the near future.

The man in charge of the relabeled Shell Puget Sound Refinery at Anacortes is Tom Smith, a 22-year Shell man whose assignments have taken him from Louisiana to Houston to Anacortes.

“It’s a little confusing to the general public, I admit,” said Smith, explaining the turnover in ownership at the refinery three-times over a four-year period.

Smith came to manage the old Shell Anacortes refinery in 1994 and ran it until 1997 when Shell and next-door Texaco formed a joint venture called Equilon Enterprises, combining the West Coast refining operations of both companies along with transportation, lubricants and retail operations.

 

Federal government steps in

The Federal Trade Commission (FTC) withheld approval of the Shell-Texaco arrangement until the companies agreed to sell off certain assets in order to preserve some measure of competition on the West Coast.

So Shell sold its old refinery to Tesoro Petroleum and joined with Texaco in a partnership to run the old Texaco refinery under the Equilon banner.

Tragedy struck the community in November of 1998 when a flash fire took the lives of six workers at the Equilon plant. It was one of the worst losses of life in an industrial accident in recent times. In a series of negotiations with the State Department of Labor in the aftermath of the tragedy, Equilon paid a $4.1 million settlement.

Just as everyone was getting used to the Equilon identity, Texaco and Chevron decided to merge.

“Because Chevron was so strong in the West, the FTC required Texaco to sell off certain assets on the West Coast, including its interest in Equilon,” said Smith.

Shell bought out the Texaco interest in the refinery, leaving it owning the nearly 150,000-barrel-per-day facility while Tesoro ended up with the old Shell refinery.

Other than that, things remain pretty much the same.

 

Refining now and in the future

Smith says the Shell refinery is still technologically state of the art and has a long, productive life ahead of it.

Shell now is the ninth largest refiner in the United States and is refocusing its efforts on the American market.

More than $500 million has been budgeted to handle the “rebranding” of former Texaco service stations to the Shell label, Smith said. The change is to be phased in over a four-year period. For the first two years, Shell will have exclusive use of the Texaco brand at those service stations it acquired in the Equilon buyout. For the second two years, Chevron and Shell can both operate Texaco stations. After that, Chevron owns the Texaco label outright.

The Anacortes Shell refinery, with a capacity of 148,600 barrels a day, runs a close second to the company’s plant at Martinez, California, at 154,800 barrels.

 

Oil links to Alaska

Puget Sound has always been tied closely to Alaska through the fishing, mining and timber industries. But Alaska crude is now key to that link now. Virtually all the crude processed at both Anacortes refineries comes out of the Alaska Pipeline and Prince William Sound in Alaska.

Shell was criticized by industry analysts for ignoring the U.S. retail market while other companies reaped huge profits during the period of high energy prices and record margins for the refining industry.

But Smith says he’s confident that things will improve under the new ownership structure.

Although refining capacity and employment levels at Shell’s Anacortes plant are not expected to increase in the near term, the company is planning to invest millions of dollars in capital projects. Some of the projects involve environmental improvements brought about as a result of a consent decree with the U.S. Environmental Protection Agency.

The company has already invested $10 million to improve its water treatment facilities and, as a result, has gone four years without any violations of water quality in Fidalgo Bay.

“Among the things that won’t change is Shell will continue to support the community as it has in the past,” said Smith.

Besides supporting some 400 family wage jobs and 100 to 150 jobs of various contractors working at the refinery site, Shell is the largest taxpayer in Skagit County, contributing several million dollars a year in state and local taxes.

The refinery also pays the Port of Anacortes some $2 million a year in fees for the use of port facilities.

 

Shell’s community involvement, contribution

Smith says that Shell employees are involved in the community as volunteers, providing leadership for various community organizations and are big contributors to United Way.

Shell itself contributes some $100,000 a year to organizations focused on safety and health, the environment and education.

 

Organizations receiving contributions from Shell Puget Sound Refinery:

• American Red Cross Real Heroes Breakfast

• Anacortes Baseball Club

• Anacortes Chamber of Commerce-Waterfront Festival

• Anacortes Public Library

• Boy Scouts, Ship 75

• Boys and Girls Club

• Burn Children Recovery Foundation

• Friends of the Forest-Anacortes Watershed Discovery Project

• Humane Society of Skagit Valley

• Mt. Baker Council of the Boy Scouts

• Newspapers in Education

• NW Children’s Theatre

• Padilla Bay Foundation

• Skagit Audubon Society

• Skagit County Community Action Agency

• Skagit County Parks and Recreation

• Skagit County Search & Rescue

• Skagit Mountain Rescue

• Summit Assistance Dogs

• The Economic Development Association of Skagit County

• The Western Foundation

• United Way of Skagit County

• Washington Business Week

• WSU Beach Watchers