Fallout from today's announcement that Hess will permanently close its Woodbridge petroleum refinery by the end of next month was swift: Gas prices rose to their highest levels since October and Hess said it will lay off 170 of 217 employees, exit the refinery business and seek a buyer for its 19 storage terminals. It will focus on exploration and production, the company said.
The news was a surprise to local officials but industry analysts saw it coming. The 55-year-old refinery in the Port Reading section had lost money in two of the past three years and Hess had cited a weak outlook for gasoline refining margins. The announcement also came a week after billionaire Paul Singer’s Elliott Associates fund said it may buy more than $800 million in Hess shares and seek board seats.
Perhaps the strongest indicator of potential trouble came last April, after Hess agreed to a settlement with federal and state regulators to spend $45 million on pollution controls at the plant over hazardous emissions. It paid a civil penalty of $850,000 at the time of the settlement.
By closing down, Hess avoids having to pay for the controls.
"People in the industry were saying the plant was the walking dead after that," said Beth Heinsohn, senior news editor at Oil Price Information Service in Wall, referring to the agreement. With a capacity of about 70,000-barrels of gasoline a day, Port Reading "isn’t a great refinery because it’s kind of small and has no crude oil unit," she said.