Tesoro Hawaii Refinery Closing: A “Loss for Hawaii”

Tesoro logo.

By Wendy Osher

Tesoro Hawaii plans to convert its 94,000-barrel per day crude oil refinery to a terminal, effectively ending the facility’s refinery operations.

The company today announced that it will cease refining operations at its Kapolei refinery during April of this year, and begin the process of converting the refinery to an import, storage and distribution terminal.

In a press release issued today, officials said Tesoro Hawaii will maintain the existing distribution system to support marketing operations and fulfill its supply commitments while continuing to offer the terminal, distribution and retail assets for sale.

The company expects to realize between $300 million and $350 million in cash by the end of 2013, driven by a reduction in working capital needs as a result of this conversion.

Gov. Neil Abercrombie responded to today’s announcement saying, “After a good faith effort to continue current refining operations, Tesoro Hawaii has determined that it is in its own best business interests to convert its Hawaii refinery into a terminal facility.”

In the statement released today, Abercrombie said, “We have offered to work with Tesoro Hawaii in exploring remaining options and achieving an orderly transition for its employees and the state’s energy needs.”

The governor said that the changing petroleum landscape underscores the urgency for Hawaii to move rapidly on meeting the state’s Hawaii Clean Energy Initiative objectives.

Citing the billions of dollars being sent each year outside of the islands to meet energy needs of the state, Abercrombie said, “Essential to our economic recovery is taking control of our state’s energy future.”

“This administration is seeking long-term infrastructure investments that ensure our electric grids are stable, reliable and modern enough to integrate all available alternative and renewable energy technologies,” said Gov. Abercrombie.

Tesoro Hawaii distributes refined products statewide in the form of gasoline, diesel, jet fuel, ship fuel, asphalt and fuel oil for electrical generation. The Kapolei refinery is one of only two refineries in Hawaii.

US Senator Mazie Hirono today also responded to the closing of the Kapolei Tesoro refinery saying it’s terrible news for the state and the workers who will lose jobs.

Sen. Hirono said she plans to work closely with the Hawaii delegation and community leaders to ensure that displaced workers and their families receive whatever federal assistance is available to them as they search for new jobs.

“Hawaii residents should know that the refinery’s operator, Tesoro, has assured my office that there will be no disruptions to Hawaii’s gasoline supply for consumers or the military due to the refinery’s closure,” said Sen. Hirono.

“This closure underscores the importance of energy self-sufficiency for Hawaii,” she said.  “While Hawaii is the most energy dependent state in the nation, we are not a dependent people. We must continue to find more ways to support research and development of renewable and alternative energy sources,” said Sen. Hirono.