Oil off the hook? Flying J refinery remains shuttered

| Tuesday, January 27, 2009

A California diesel and fuel refinery owned by America’s largest diesel retailer has remained closed for nearly 30 days after a company-imposed 10-day closing for maintenance.

The Flying J owns and operates the Big West refinery in Bakersfield, CA, which has remained closed for more than two weeks following its self-imposed 10-day hiatus at the first of the year.

The Ogden, Utah-based diesel retailer filed Chapter 11 bankruptcy in late December 2008. In early January, company officials announced that the Big West refinery wouldn’t operate for 10 days for maintenance.

At that time, many industry insiders speculated the refinery might not reopen, which could lead to higher gas and diesel prices in California in particular.

Peter Hill, a company spokesman, told Land Line Magazine Tuesday, Jan. 27, that the Flying J had nothing new to report.

“At this point there really isn’t any update I can provide,” Hill said. “As things stand, they’re working with suppliers. Hopefully, there will be something to announce soon.”

As of December, Big West provided a reported 6 percent of California’s diesel. It’s closure has raised concern that it could cause the already traditionally higher fuel prices in California to go increase even more.

Flying J recently replaced CEO J. Phillip Adams with Crystal Call Maggelet, daughter of company founder Jay Call.

The change came after several weeks of bad news for the Flying J.

According to court documents, Big West refineries in Bakersfield and North Salt Lake City, UT, operate to create about 100,000 barrels of crude oil per day. Another subsidiary, Longhorn Pipeline, can move 80,000 barrels of diesel and gasoline each day from Houston to El Paso, where the company reportedly owns a terminal capable of storing more than a million barrels.

According to a statement filed by former CEO Adams, Flying J had 2007 sales exceeding $16.2 billion. The Flying J Group operates more than 200 travel plazas in 41 states and six Canadian provinces and employs about 16,000 workers.

Through other subsidiaries, Flying J also invests in more than 200 oil wells and develops land.

“The debtors believe that their businesses are fundamentally sound and profitable and that these Chapter 11 cases will allow them to resolve their liquidity constraints and emerge as stronger, healthier companies,” the Dec. 22 filing read.

Among Flying J’s biggest debts are more than $85.8 million to Zion Bank’s retail loan center, more than $69.4 million to Conoco Philips, and nearly $12 million to Shell.

Diesel prices in California have mostly leveled off with other states in recent months.

The Bakersfield Californian reported last week that the Big West refinery recently was considering a $700 million expansion before the company’s recent cash problems.

– By Charlie Morasch, staff writer
charlie_morasch@landlinemag.com

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