HOUSTON (ICIS)--Shell has agreed to sell its Mobile, Alabama, refinery to Vertex Energy, a major US re-refined base oil producer and alternative feedstock processor, according to a release.
The refinery can process 90,000 bbl/day of crude oil and other refined products, and it produces low-sulphur vacuum gas oil/heavy olefin feedstock and benzene.
The site "has the optionality to run as a standalone refinery, produce base oils or chemicals feedstock", Shell said in the release.
In addition to the refinery, the sale includes associated co-located logistics infrastructure and the Blakeley Island Terminal.
Shell and Vertex will have crude supply and offtake agreements to support existing Shell customers in the region.
Earlier this week, Shell sold its stake in its Deer Park, Texas, refinery to partner Pemex.
Shell's strategy is to reduce its refining footprint to six core sites that are integrated with its chemicals and trading businesses. Mobile was not one of these sites.
Vertex said the Mobile site would be its flagship refining asset and that the purchase "positions the company to become a pure-play producer of renewable and conventional products."
Vertex also said that an $85m conversion of the refinery's hydrocracking unit is planned for completion by the end of 2022.
Vertex expects that the refinery will be capable of producing 10,000 bbl/day of renewable diesel fuel and renewable byproducts by the end of 2022. That is expected to increase to 14,000 bbl/day by the end of 2023,
Vertex CEO Ben Cowart said the sale includes 3m bbl of crude and product storage.
"Our vision for this site is that of diversification. We will seek to lead the southeast region in marketing next generation fuels and products that are not currently produced by the refinery today," Cowart said.
Deal consideration is $75m in cash plus the value of the hydrocarbon inventory at closing, which is expected in the fourth quarter.
Vertex will offer employment to all employees providing dedicated support to the refinery, the release said.
Thumbnail image shows a Shell gas and storage tank. Image by Shutterstock.