A Fossil Fuel Bet in Hawai‘i
Two Mainland energy companies have invested more than half a billion dollars in Hawaii recently...on fossil fuels. Pacific Business News Editor in Chief A. Kam Napier explains why.
The two companies are Houston-based Par Pacific Holdings and New York-based One Rock Capital Partners. Par purchased the state’s largest refinery, gas stations and more from Tesoro in 2013 for $539 million. It has since also acquired Mid-Pac Petroleum and the exclusive license to the 76 brand in the state for $107 million.
One Rock last month put in an offer on Hawaii’s other refinery and everything else that comes with the Chevron brand in Hawaii, for an undisclosed sum. That deal is expected to be completed later this year.
This may sound odd, since Hawaii has an ambitious goal of moving to 100% renewable energy by 2045. What people forget, however, is that goal applies to electricity generation. Electricity accounts for just 40% of the state’s total energy use, the rest is consumed by transportation and transportation fuels are harder to replace with renewables. Consequently, both companies anticipate being in the fossil fuel business here for decades to come, providing aviation fuel and fuel for cars, trucks and boats. Another 8% of the locally refined transportation fuels will go to military customers.
Electric vehicles are making in-roads, but these still need to be recharged from the grid and, for now, 70% of the electricity generated in the state is still powered by oil. That amount will taper down to zero by 2045. In fact, oil consumption in the state has been dropping steadily over the past decade, from 9.4 million barrels in 2006 to 6.7 million barrels last year.