Williams still looking for buyer of Alaska assets
FAIRBANKS - Williams Cos. has found a buyer for its Memphis refinery, but its North Pole and Alaska properties are still unclaimed.
Premcor Inc., a Connecticut-based refinery company, agreed to purchase Williams' Tennessee property for approximately $465 million.
"In September we realized we would get more value by selling them separately," Kelly Swan, Williams' spokesman, told the Fairbanks Daily News-Miner.
Since September, a Williams negotiation team concentrated solely on putting a deal together for the Memphis refinery, Swan said. Now the team will focus on Williams' Alaska properties, he said.
The Alaska properties, under the subsidiary Williams Alaska Petroleum, include the refinery and two associated terminals, 29 convenience store-gas stations, partial ownership of Anchorage CargoPort, and a 3 percent stake in the trans-Alaska oil pipeline.
Williams Alaska Petroleum has about 500 employees and at one time was estimated to be worth about $500 million. Williams Cos. put the Alaska and Memphis property on the market in June, saying it hoped to get $1 billion for both. Premcor signed a purchase agreement with Williams in late November. The company agreed to pay $315 million for the assets and an estimated $150 million for its inventory.
One analyst cautioned that the Memphis sale would likely be the only refinery deal for a while out of nine U.S. refineries currently for sale.
Low refining margins and impending potentially high environmental regulation costs are keeping refineries on the market, said Bryan Caviness, a Chicago analyst for Fitch Ratings. Companies are looking for assets that fit with their other properties, Caviness said.
The Memphis refinery is a good match with Premcor's other Midwest holdings and also has a stable market for petroleum products, he said. The air freight company FedEx is based in Memphis and is the refinery's biggest customer, Swan said.
Alaska's refinery is a long way away from customers outside of Alaska, Caviness said.
"Being farther away restricts where it can go for delivering its products," he said. But isolation secures the North Pole refinery a stable market, said John Olson, an analyst for the Houston-based Sanders Morris Harris.
The Alaska refinery is one of the most profitable in the world because it has a steady supply of crude and a solid market for heating fuel, gasoline and jet fuel, he said.