Big West Oil, a subsidiary of Ogden-based Flying J Inc., has agreed to buy a California oil refinery from Shell Oil Co. The purchase marks Big West's first entry into the California refinery arena.
Terms of the sale were not disclosed.
The refinery, located in Bakersfield, Calif., began production in 1932 and has the capacity to refine up to 70,000 barrels of crude oil per day.
Virginia Parker, Flying J spokeswoman, said Monday that the company "wants to expand its refining operations and felt that this (acquisition) was a good opportunity to do so."
In a statement released Monday, Shell president Lynn Laverty Elsenhans said the Bakersfield facility was "no longer strategic to Shell and does not meet our criteria for continued investment."
Shell will continue to own and operate certain pipelines that serve the refinery, according to the Shell statement, as well as the nearby Shell Bakersfield Products Terminal. Big West will operate the terminal under a long-term lease.
About 200 people work at the Bakersfield refinery, according to Parker, and some of them have accepted other positions with Shell.
"We will interview all employees who desire to remain at the plant," Parker said. "We cannot say whether all employees desiring to stay will be offered employment, but we certainly hope to retain most existing employees who desire to come to work with us."
Big West also operates a refinery in North Salt Lake. That refinery employs about 130 people and has a total capacity of 35,000 barrels per day.
Flying J, a privately held company, reported annual sales of $5.6 billion in 2003 and estimates that it saw $7.5 billion in sales in 2004. The company employs 12,500 people nationwide through its interstate operations, transportation, refining and supply, exploration and production, and its financial services and communications divisions.
Close of the sale is subject to regulatory and other approvals. The deal is expected to be complete in this year's first quarter.
The Bakersfield refinery produces 2.2 percent of California's gasoline and 6 percent of its diesel, according to the California Energy Commission.
"While we have to study the details of the sale, the continued operation of Shell's Bakersfield refinery would be a victory for California drivers," California Attorney General Bill Lockyer said in an e-mailed statement. "California drivers cannot afford the loss of this facility, and they would be the biggest beneficiaries if Bakersfield remains open."
Contributing: Bloomberg News; E-mail: jnii@desnews.com