About Par Pacific Holdings
Par Pacific Holdings, Inc. owns and operates market-leading energy and infrastructure businesses. The company’s strategy is to acquire and develop energy and infrastructure businesses in logistically complex, niche markets. Segments The company operates through three primary segments: Refining, Retail, and Logistics. Refining The company owns and operates three refineries with total operating crude oil throughput capacity of 155 Mbpd. The company’s refinery in Kapolei, Hawaii, produces gasoline, jet fuel, ultra-low sulfur diesel (‘ULSD’), marine fuel, low sulfur fuel oil (‘LSFO’), and other associated refined products primarily for consumption in Hawaii. The company’s refinery in Newcastle, Wyoming, produces gasoline, jet fuel, ULSD, and other associated refined products that are primarily marketed in Wyoming and South Dakota. The company’s refinery in Tacoma, Washington, produces gasoline, jet fuel, ULSD, asphalt, and other associated refined products that are primarily marketed in the Pacific Northwest. Retail The company operates 121 fuel retail outlets in Hawaii, Washington, and Idaho. The company’s fuel retail outlets in Hawaii sell gasoline and diesel throughout the islands of Oahu, Maui, Hawaii, and Kauai. The company operates convenience stores at 34 of the company’s Hawaii retail fuel outlets under the company’s proprietary ‘nomnom’ brand that sell merchandise such as soft drinks, prepared foods, and other sundries. The company’s Hawaii retail network includes Hele and ‘76’ branded fuel retail sites, ‘nomnom’ branded company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations. The company’s nomnom-branded convenience stores in Washington and Idaho sell gasoline, diesel, and retail merchandise. Logistics The company operates an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rocky Mountain regions. The company owns and operates terminals, pipelines, a single point mooring (‘SPM’), and trucking operations to distribute refined products throughout the islands of Oahu, Maui, Hawaii, Molokai, and Kauai. The company leases marine vessels for the movement of petroleum, refined products, and ethanol between the U.S. West Coast and Hawaii. The company owns and operates a crude oil pipeline gathering system, a refined products pipeline, storage facilities, and loading racks in Wyoming and a jet fuel storage facility and pipeline that serve Ellsworth Air Force Base in South Dakota. The company owns and operates logistics assets in Washington, including a marine terminal, a unit train-capable rail loading terminal, storage facilities, a truck rack, and a proprietary pipeline that serves Joint Base Lewis McChord. In 2020, the company completed a project at its Tacoma, Washington, location to allow for the storage and shipment of ethanol through the company’s unit train and marine terminals. The company also owns a 46.0% equity investment in Laramie Energy, LLC (‘Laramie Energy’), an entity focused on developing and producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado. Refining segment The company’s Refining segment buys and refines crude oil and other feedstocks into petroleum products (such as gasoline and distillates) at the company’s Hawaii, Wyoming, and Washington refineries. Hawaii Refinery The company’s Hawaii refinery is located in Kapolei, Hawaii, on the island of Oahu, and is rated at 94 Mbpd of Crude unit operating throughput capacity. The Hawaii refinery’s major processing units produce liquified petroleum gas (‘LPG’), naphtha, gasoline, jet fuel, ULSD, marine fuel, LSFO, high sulfur fuel oil (‘HSFO’), asphalt, and other associated refined products. The configuration of the company’s Hawaii refinery uniquely fits the demands of the Hawaii market. The company sources its crude oil for the Hawaii refinery from North America, Asia, Latin America, Africa, the Middle East, and other sources. Effective March 3, 2022, the company suspended purchases of Russian crude oil as a response to the Russia-Ukraine conflict. Crude oil is received into the Hawaii refinery’s tank farm, which includes 3.4 MMbbls of total owned crude oil storage and/or third-party crude oil storage. The company processes the crude oil through various refining units into products and stores them in the Hawaii refinery’s owned 3.3 MMbbls of refined product storage and additional third-party product storage. This storage capacity allows the company to manage the various product requirements of the company’s customers. For example, in 2022, the company’s Hawaii refinery leased 0.3-0.4 MMBbls of capacity to the Defense Logistics Agency (‘DLA’) until April 2024. Revenue from this agreement is reported in the company’s Hawaii Logistics segment. The company finances its Hawaii refinery’s hydrocarbon inventories through a supply and offtake agreement (the ‘Supply and Offtake Agreement’) with J. Aron & Company LLC (‘J. Aron’). Under the Supply and Offtake Agreement, J. Aron holds title to all crude oil and refined product stored in tankage at the Hawaii refinery. The company purchases crude oil from J. Aron on a daily basis at market prices and sells refined products to J. Aron as they are produced. The company repurchases these refined products from J. Aron prior to selling them to third parties. The Hawaii refinery operated at an average combined crude oil throughput of 81.8 Mbpd, or 87% of crude oil utilization, to meet local demand for the year ended December 31, 2022. The company’s Par West refinery has been shut down and is not expected to restart. The company’s Hawaii refining business contracts with wholesale and bulk customers, as well as the company’s Hawaii retail network. Many of these contracts also involve use of the company’s Hawaii logistics assets to ultimately serve each customer. Wholesale customers include jobbers and other non-end users, as well as 43 locations where the company delivers fuel to a location that subsequently sells the product at retail to the end user. Bulk customers include utilities, airlines, military, marine vessels, industrial end-users, and exporters. Washington Refinery The company’s Washington refinery is located in Tacoma, Washington, on approximately 139 fee-owned acres and is rated at 42 Mbpd throughput capacity. The Washington refinery’s major processing units include crude oil distillation, vacuum, jet treating, diesel hydrotreating, isomerization, and reforming units, which produce ULSD, jet fuel, gasoline, asphalt, and other associated refined products that are primarily marketed in the Pacific Northwest. The company sources its crude oil for the Washington refinery primarily from Canadian and Bakken producers, as well as other North American sources. Most of the crude oil is delivered to the refinery via the company’s owned unit train facility and the rest is delivered by barge. Crude oil is received into the refinery tank farm, which includes 1.2 MMbbls of total crude oil storage. The company processes the crude oil through various refining units into products and stores them in the refinery’s 1.5 MMbbls of refined product tankage. This storage capacity allows the company to manage the various product requirements of the company’s customers in the state of Washington and other targeted market destinations. In 2020, 0.2 MMbbls of crude oil storage was repositioned as renewable fuels storage as part of the completion of the company’s project to allow for storage and throughput of renewable fuels at the refinery. The company finances its Washington refinery hydrocarbon inventories through an intermediation arrangement (the ‘Washington Refinery Intermediation Agreement’) with Merrill Lynch Commodities, Inc. (‘MLC’). Under this arrangement, the U.S. Oil purchases crude oil supplied from third-party suppliers and MLC provides credit support for certain crude oil purchases. MLC’s credit support can consist of either providing a payment guaranty, causing the issuance of a letter of credit from a third party issuing bank, or purchasing crude oil directly from third parties on the company’s behalf. The U.S. Oil holds title to all crude oil and refined products inventories at all times and pledges such inventories, together with all receivables arising from the sales of these inventories, exclusively to MLC. The Washington refinery operated at an average throughput of 35.5 Mbpd, or 85% utilization, for the year ended December 31, 2022. In 2021 and 2022, the company executed turnaround activities in Washington, which resulted in lower throughput and utilization outside of market conditions. The company’s Washington refining business transports crude oil and refined products through the company’s logistics network and sells refined products to wholesale, bulk, and retail customers primarily in the Pacific Northwest. Wyoming Refinery The company’s Wyoming refinery is located in Newcastle, Wyoming, on approximately 121 fee-owned acres and with a capacity of 19 Mbpd throughput. The Wyoming refinery’s major processing units include crude oil distillation, catalytic cracker, naphtha hydrotreating, and reforming units, which produce gasoline, ULSD, jet fuel, and other associated refined products. In 2022, the company’s Wyoming operations set a new crude production record of processing 19.2 Mbpd. The company sources its crude oil for the Wyoming refinery from local producers in the Rocky Mountain region of the United States and North Dakota, as well as other North American sources. Most of the crude oil is delivered to the refinery via the company’s owned pipeline network and the rest is delivered by truck. Crude oil is received into the refinery tank farm and crude oil terminals, which include 267 Mbbls of total crude oil storage. The company processes the crude oil through various refining units into products and stores them in the Wyoming refinery’s 490 Mbbls of refined product tankage. The Wyoming refinery’s storage capacity allows the company to manage the various product requirements of the company’s customers in the states of Wyoming and South Dakota and other targeted market destinations. The Wyoming refinery operated at an average throughput of 16.5 Mbpd, or 92% utilization, for the year ended December 31, 2022. In 2020, the company executed a turnaround in Wyoming, which resulted in lower throughput and utilization outside of market conditions. The company’s Wyoming refining business transports refined products through the company’s logistics network to wholesale, bulk, and retail customers primarily in Wyoming and South Dakota. Products are also distributed by rail from the company’s refinery to markets beyond the company’s logistics network. Retail segment The Retail segment includes 90 locations in Hawaii and 31 locations in Washington and Idaho where the company sets the price to the retail consumer. Of these, 34 of the Hawaii locations and all 31 Washington and Idaho locations are operated by the company’s personnel and include various sizes of convenience stores, snack shops, and kiosks. The remaining 56 Hawaii locations are cardlocks or sites operated by third parties where the company retains ownership of the fuel and set retail pricing. The company holds exclusive licenses within the state of Hawaii to utilize the ‘76’ brand for retail locations, with 40 of the company’s retail sites branded ‘76’. The ‘76’ license agreement expires October 31, 2031, unless extended by mutual agreement. An additional 42 of the company’s sites operate under its proprietary Hele fuel brand. The company’s eight cardlock locations on Kauai are branded Kauai Automated Fuels (‘KAF’). All 34 company-operated convenience stores in Hawaii are branded ‘nomnom,’ the company’s proprietary brand. In 2023, the company plans to convert all of the company’s convenience stores in Hawaii to the company’s Hele brand. The company operates convenience stores at all 31 of the company’s retail fuel outlets in Washington and Idaho. The company uses its proprietary ‘nomnom’ brand at both the fueling facilities and stores. The company’s store count includes the acquisition and rebranding in 2022 of three new convenience store locations in Washington acquired in December 2, 2022. Additionally, the company brokes ground on a new to industry site in a growth area of Spokane, Washington, which is scheduled to open during the second half of 2023. Competition The company’s Hawaii competitors include the Shell, Texaco, Costco, Safeway, and Sam’s Club national brands, regional brand Aloha, and other local retailers. Competitors of the company’s Pacific Northwest retail assets include the Chevron, Exxon, Conoco, Safeway, and Costco national brands, regional brands, such as Maverik, Holiday, and Fred Meyer. Logistics segment The company’s Logistics segment generates revenues by charging fees for transporting crude oil to the company’s refineries, delivering refined products to wholesale and bulk customers and to the company’s retail business, and storing crude oil and refined products. Substantially all of the company’s revenues from its Logistics segment represent intercompany transactions that are eliminated in consolidation. Hawaii Logistics The company’s logistics network extends throughout the state of Hawaii. On Oahu, the system begins with the company’s SPM located 1.7 miles offshore of the company’s Hawaii refinery. This SPM allows for the safe, reliable, and efficient receipt of crude oil shipments to the Hawaii refinery, as well as both the receipt and export of finished products. Connecting the SPM to the Hawaii refinery are three undersea pipelines: a 30-inch line for crude oil, a 20-inch line, and a 16-inch line, both for the import or export of refined products. The company also has an on-shore pipeline manifold, which allows for crude oil to be transferred between the Hawaii refinery and the IES Downstream, LLC (‘IES’) storage facility located approximately 2 miles away. The manifold also allows for transfer of crude oil between the SPM and the IES facility. From the Hawaii refinery’s gates, the company distributes refined products through its logistics network throughout the islands of Oahu, Maui, Hawaii, Molokai, and Kauai and for export to the U.S. West Coast and Asia. The Oahu logistics network includes a 27-mile wholly owned and operated pipeline network that transports refined products from the company’s Hawaii refinery to delivery locations. A significant portion of the company’s Oahu refined product volumes are distributed through a multi-product pipeline (the ‘Honolulu Products Pipeline’) to the company’s leased and operated Sand Island terminal, the Honolulu International Airport, interconnections to Navy and Air Force fuel facilities, and two third-party terminals in Honolulu Harbor. In addition to the Honolulu Products Pipeline, the company owns four proprietary pipelines connecting its Hawaii refinery to Kalaeloa Barbers Point Harbor, approximately three miles from the Hawaii refinery. The four pipelines deliver refined products to barges for distribution to the neighboring islands or export, the local utility pipeline and storage network, and another third-party terminal on the west side of Oahu. The Oahu pipeline network is generally configured to be bidirectional, allowing for both delivery and receipt of products. The company also operates a proprietary trucking business on Oahu to distribute gasoline and road diesel to the company’s customers. The company has a long-term agreement with IES for storage and throughput at the Hawaii refinery, which provides for the right to utilize 2 MMbbls of dedicated crude oil and refined product storage, as well as certain IES logistics assets, including its off-shore mooring and Honolulu pipeline system. The company’s terminal facilities on Oahu include its Sand Island facility that comprises two tanks with a total capacity of 30 Mbbls, as well as contractual rights to utilize strategically located third-party facilities both near the Hawaii refinery and at Honolulu Harbor. The company’s logistics network for the islands neighboring Oahu consists of leased barge equipment, refined product tankage, and proprietary trucking operations on the islands of Maui, Hawaii, Molokai, and Kauai. The company charters a barge and have service agreements with third parties to serve its neighbor island markets. The barges deliver to, and product is dispensed from, a neighbor island network of seven petroleum terminals with total storage capacity of 301 Mbbls. In addition to the movements within Hawaii, the company leases Jones Act marine vessels to allow for the movement of petroleum, refined products, and ethanol between the U.S. West Coast and Hawaii. Washington Logistics The company’s Washington logistics network includes 2.8 MMbbls of storage capacity, a proprietary 14-mile jet fuel pipeline that serves Joint Base Lewis McChord, a marine terminal with 15 acres of waterfront property, a unit train-capable rail loading terminal with 107 unloading spots, a manifest rail siding with 32 spots, including asphalt, butane, and biodiesel loading and unloading facilities, and a truck rack with six truck lanes and ten loading arms. These assets provide connectivity to Bakken, Canadian, and Alaskan crude oil, renewable fuels, and the Pacific, West Coast, Pacific Northwest, and Rockies product markets. Wyoming Logistics The company’s Wyoming logistics network includes 190 Mbbls of crude storage tank capacity and a 50-mile crude oil pipeline that provides the company accesses to crude oil from the Powder River Basin. This network also includes a 40-mile refined products pipeline that transports product from the company’s Wyoming refinery to a common carrier with access to Rapid City, South Dakota. The logistics network in Wyoming includes storage, loading racks, and a rail siding at the refinery site. The company’s crude oil and refined product tanks at the Wyoming refinery have a total capacity of 593 Mbbls. The company also owns and operates a jet fuel storage facility and pipeline that serve Ellsworth Air Force Base in South Dakota. Markets Pacific Northwest and Rockies Markets Spokane, Washington, and Northwest Idaho are the primary regions of the company’s Pacific Northwest retail operations. A significant portion of the products produced by the company’s Washington refinery stay within the Puget Sound region. The primary market for the company’s Wyoming refined products is the Black Hills Region in South Dakota, driven largely by Pennington, Lawrence, and Meade counties, which represents nearly half of the state’s taxable tourism sales. The company also distributes refined products to customers in central and northeastern Wyoming. Other Operations Laramie Energy As of December 31, 2022, the company owned a 46.0% equity investment in Laramie Energy, an entity focused on developing and producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado. Environmental Regulations Several of the company’s businesses generate wastes, including hazardous wastes, that are subject to regulation under the federal Resource Conservation and Recovery Act (‘RCRA’) and state statutes. The company’s operations are in material compliance with all applicable NORM standards. The Clean Water Act (‘CWA’) regulates the discharge of pollutants to waters of the U.S., including wetlands, and requires a permit for the discharge of pollutants, including petroleum, to such waters. Certain facilities that store or otherwise handle crude oil are required to prepare and implement Spill Prevention, Control, and Countermeasure and Facility Response Plans relating to the possible discharge of oil to surface waters. The company is required to prepare and comply with such plans and to obtain and comply with discharge permits. The CWA also prohibits spills of oil and hazardous substances to waters of the U.S. in excess of levels set by regulations and imposes liability in the event of a spill. The company is in substantial compliance with these requirements. The company’s refining business is subject to very significant state and federal air permitting and pollution control requirements, including some that are the subject of ongoing enforcement activities by the EPA as described in more detail below. The company is subject to the requirements of the federal Occupational Safety and Health Act (‘OSHA’) and comparable state statutes. The OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendments and Reauthorization Act, and similar state statutes require the company to organize and/or disclose information about hazardous materials used or produced in the company’s operations. Significant Customers The company sells a variety of refined products to a diverse customer base. The majority of the company’s refined products are primarily sold through short-term contracts or on the spot market. Properties Natural Gas and Oil Properties Laramie Energy All of the assets held by Laramie Energy are located in Garfield, Mesa, and Rio Blanco counties, Colorado. All of the natural gas, natural gas liquids, and condensate are produced primarily from the Mesaverde formation and to a lesser extent the Mancos formation and some of the acreage is contiguous. Other The company also owns certain immaterial minority interests in wells located in Colorado. History The company was founded in 1984. It was incorporated in 1984. It was formerly known as Par Petroleum Corporation and changed its name to Par Pacific Holdings, Inc. in 2015.
