Who would buy BP Texas City?

TEXAS CITY — BP’s announcement that it is seeking to sell its Texas City and Carson, Calif., refineries created more questions than answers Tuesday. Namely, who is most likely to purchase those refineries, especially the 1,200-acre facility in Texas City?

“That’s a good question,” Barbara Shook, of the Energy Intelligence Group, said. “Because the U.S. market for refined products is flat, and the new mandate for more fuel-efficient vehicles, it’s going to be tough.

“The U.S. doesn’t need the capacity it has now.”

BP already has had talks with “competent operators,” CEO Bob Dudley said. However, he would not identify who those potential buyers would be.

Could it be Royal Dutch Shell, the world’s No. 2 oil company?

The company did consider a merger with BP last summer during the Gulf of Mexico oil spill, but talks never went far. Still, BP’s stock price jumped last month when a British newspaper reported that the two companies talked about a marriage.

“Why would Shell want that old refinery (in Texas City) when they have a better refinery in Deer Park,” Shook asked rhetorically.

BP’s top refinery executive, Iain Conn, said the company spent more than $1 billion since 2005 to upgrade the Texas City refinery, which is the third largest in the nation. He said those upgrades at Texas City and the Carson refinery made those facilities two of the most upgraded facilities in the world.

So, would China, with its hunger for fuel, consider purchasing the refinery to meet its growing demands?

Last month, PetroChina, the country’s second largest refiner, took major stakes in two refineries in France and Scotland to expand its global refining business. Shook doesn’t think that’s likely either.

Shook said China already has one of the newest and largest oil refineries in the world via China Petroleum and Chemical Corporation’s partnership with Exxon Mobile Corp. and Saudi Aramco for a facility in Fujian Province.

China also has steadily increased its refining capacity at about 16 other facilities across the country.

“Everything they’ve got is new,” Shook said. “Why would they want an old refinery in the U.S.?”

Shook believes as well that the $3.7 billion BP expects to get for the Texas City and California oil refineries is overshooting what the final sales prices will be.

“I think they are going to have a challenge finding a buyer,” she said. “That is a very optimistic price.”

While no energy sector expert, Jimmy Hayley, president of the Texas City-La Marque Chamber of Commerce, is confident whomever buys the refinery in Texas City will be a major player.

“It’s just too big that a small company could get it,” he said. “It’s got to be a large player.”

Or does it?

Steve Lyle, the financial secretary for Local 13-1 of the United Steelworkers, the union that represents 1,200 of BP’s 2,200 employees in Texas City, said one of the things the union will watch closely is if the new owner is a company with experience in oil refining or if an investment group moves in to purchase the Texas City refinery.