News that Murphy Oil plans to sell its Superior refinery came as a surprise to local officials Thursday, but by Friday they were seeing reason to hope a new owner could be the key to a brighter future for the plant.
Jeff Vito, the city's director of development and government affairs, said the first indication he had of the company's decision to sell its refining operations was Thursday night, when he received an e-mail after 8 p.m. Twelve hours later he was listening to Murphy President and CEO David Wood explain that refining was a small part of the business and "no longer strategic" for the company.
In a conference call Friday morning, Wood said the company had received inquiries concerning its refining operations before the decision to sell was made.
The company hopes to complete the sale of its three refineries -- in Superior; Mereaux, La.; and Milford Haven, Wales -- by early next year.
"I took out of that session this morning that they've been talking to some interested parties already," Vito said. "They are probably pretty far down that path would be my guess if they're going to try to get this thing completed by the first quarter of '11.
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"But I'm looking at it that this could be a real opportunity for this refinery."
After all, the company had considered a nearly seven-fold expansion of the Superior facility within the past few years, a proposed expansion that ended because Murphy Oil couldn't find a partner necessary to secure an oil supply. The project would have cost the company half its capitalized value, according to Jim Kowitz, the interim refinery manager in 2008 when Murphy Oil ended exploration of the expansion.
A company the size of Murphy Oil faces significant challenges to put together the capital for a major expansion, Vito said. A company larger than Murphy would have a better ability to put that package together.
Vito said the Superior refinery is a strong candidate for that type of expansion because of its location and less volatile weather conditions than experienced by refineries in the south.
"A lot of the work they [Murphy Oil] have done to go down that path could be very attractive to a company," Vito said.
While the Superior refinery is the smallest of the three, Murphy Oil has continued to invest in the facility, spending about $100 million over the past few years, said Superior Mayor Dave Ross. Last year, the company launched a $50 million project to meet changing environmental standards for fuel.
The announcement does raise concerns for local officials, who are assembling a team of business and government leaders to monitor and assist in the sale and to protect employee interests through the process.
"We really want to make sure that we stay on top of what's happening at Murphy Oil," Ross said. "One of our main concerns is the employees. The refinery is a valuable asset to our community; they've been a great civic partner."
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Murphy Oil employs about 156 people at its Superior refinery and contributes about $100 million in salaries and services to the local economy, and refinery manager Dave Podratz sees that continuing well into the future.
Refineries get bought out and there's just a different name on the coveralls, Podratz said. He said the first refinery he worked for 30 years ago was bought out, and people he worked with then are still on the job.
State Sen. Bob Jauch, D-Poplar, said it's very important that the community doesn't overreact to the announcement. It's a very stable, modernized and regionally significant asset, he said.
"We've gotten used to a company that has treated the community very, very well," Jauch said. And he's optimistic that whatever company buys the refinery will recognize the area has a good work force and a modern, updated facility that provides a vital resource for the nation.
