While Hawaii pursues ambitious renewable energy goals, its refineries are defying expectations and thriving in a fossil-fuel business. Pacific Business News editor-in-chief A. Kam Napier has more.
In 2013, the Hawaii Refinery Task Force assembled by then Gov. Neil Abercrombie, predicted that one or both of Hawaii’s two refineries would be out of business by 2020. But PBN energy reporter HJ Mai found that both are alive and well, poised to last well beyond 2020.
At the time of the task force report, our refineries were owned by Chevron and Tesoro, both major corporations that saw Hawaii’s move toward renewable energy future as an eventual money-loser for the operations here. Both refineries have since been acquired by private equity firms, one by Par Pacific Holdings based in Houston, the other, Island Energy Services, by New York-based One Rock Capital Partners.
The global energy market has changed, too. Oil prices are low, but the world has not been adding new refineries — in fact, refinery capacity has been declining in the Asia-Pacific region — so those refineries that do exist are operating on comfortable profit margins of anywhere from $4 to $8 dollars per barrel.
Both Par and One Rock plan to expand the number of the gas stations they own and supply. Island Energy Services owns and operates 56 Texaco-branded stations statewide while Par Hawaii has 126 stations under the Hele and 76 brands.
Not surprisingly, though, their top product is jet fuel. Civilian and military planes fueling up in Hawaii consume as much as 1.68 million gallons per day, statewide. That’s more than our refineries can produce. Par Hawaii will invest $30 million in its facility to meet more of this demand.