Philadelphia Energy Solutions LLC, owner of an oil refinery that supplies more than a quarter of the U.S. east coast’s crude refining capacity, filed for bankruptcy with a plan that could allow it to shed some environmental costs.
The restructuring would allow PES to emerge a new company with the same stakeholders, according to the firm’s chief executive. Court filings show it intends to do so through a sale that will erase $300 million to $350 million of compliance costs. Those expenses helped spur the Chapter 11 filing by PES, which runs the largest oil refinery serving the New York Harbor gasoline and diesel market. It’s a joint venture between Carlyle Group LP and Energy Transfer Partners LP subsidiary Sunoco Inc.
The compliance costs include “renewable identification numbers” or RINs, which the company was forced to buy under a federal program that has cost $832 million since 2012, the court filing shows. The purchases create an “unpredictable, escalating and unintended compliance burden” that amount to twice the cost of payroll and almost 1-1/2 times capital expenditures, the company said.