KAPOLEI, Hawaii -- Island Energy Services LLC (IES) has shifted its strategic focus to logistics and retail operations while ceasing its refining operations, the Hawaiian company said. It has reached an agreement to sell select refinery assets to Par Pacific Holdings Inc. for $45 million. It also plans to expand its retail operations with the opening of a new Texaco-branded gas station in Kapolei, Hawaii, in early 2019, as well as other new retail outlets.
Par Pacific intends to use the assets, located near its own Kapolei refinery, to supplement existing operations and for continued operations to supply fuel to IES, which will allow Kapolei-based IES to fulfill certain fuel-supply contracts. IES has also agreed to enter into a long-term agreement with Par Pacific to provide fuel storage and throughput services.
To supply its customers, including IES's 56 Texaco-branded stations, IES plans to continue to source petroleum products from its current network of local and global suppliers and does not expect any disruption to Hawaii's supply of petroleum products as a result of this deal. IES is the official licensee of the Texaco brand in Hawaii. In November 2016, it completed the acquisition of Chevron USA Inc.’s Texaco refining, distribution and retail assets in Hawaii.
IES also expects to reinvest net sale proceeds in Hawaii to further expand its logistics infrastructure, which includes a network of tank farms, pipelines and other distribution assets.
"This shift in operations better positions IES as an integrated logistics provider, anchored by our large-scale Kapolei import terminal,” IES CEO Jon Mauer said. “We look forward to maintaining our role as a trusted local fuel supplier for the state as we respond to changing market conditions, industry regulations and Hawaii's long-term energy mandate. Our immediate and long-term focus is to continue to reliably service our customers, both through this transition and beyond."
The companies expect the transaction to close before the end of fourth-quarter 2018, subject to customary closing conditions, including certain regulatory and compliance matters. Following the transaction, IES and Par Pacific will continue to operate as independent competitors.
“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," said Mauer.
Par Pacific, based in Houston, owns and operates energy and infrastructure businesses. It owns and operates one of the largest energy networks in Hawaii with a 94,000-barrels-per-day (bpd) refinery, a logistics system supplying the major islands of the state and 91 retail locations. In the Pacific Northwest and the Rockies, Par Pacific owns and operates an 18,000-bpd refinery, a logistics system and 33 retail locations.