‘We don’t see the refinery starting’: PES site’s new owner envisions an ‘environmentally conscious’ commercial hub

The former PES refinery site in South Philadelphia. (Kimberly Paynter/WHYY)

The former PES refinery site in South Philadelphia. (Kimberly Paynter/WHYY)

Chicago-based Hilco Redevelopment Partners is now officially the owner of the former Philadelphia Energy Solutions refinery complex in Southwest Philadelphia. The deal closed about midday Friday for a final price of $225.5 million.

Hilco’s plan is to transform the 1,300-acre site into a multimillion-dollar distribution and commercial hub, ending a legacy of 150 years of oil refining on the property.

“We feel very lucky, we feel honored,” Roberto Perez, chief executive officer of the real estate development company, said in a phone interview with WHYY. “We view this opportunity as a generational opportunity to invest in Philadelphia, do the right thing from an environmental perspective — we work very closely with Evergreen and all the different stakeholders —  to clean up the asset and then redevelop it.”

(Evergreen Resources is the Energy Transfer subsidiary in charge of cleaning up legacy Sunoco contamination at the site before PES took it over in 2012.)

Perez said the idea is to have multiple users at the site — “the Home Depots of the world, the FedEx of the world, the Targets of the world” — that need facilities for sorting and that can then take advantage of the site’s location to move their products through the port, the airport, by rail or on highways.

The redevelopment process will start immediately, Perez said, with a cleanup phase that includes the demolition and decommissioning of the refinery infrastructure. Hilco will keep and maximize the use of the Schuylkill River tank farm, pipelines, and access to the waterfront and railyards, Perez said.

“But from a refinery perspective, actually refining products here, we do not see that happening,” he said. “We do not see the refinery starting, and our vision for the project is going to meet the new economy, which is more environmentally conscious from a development perspective.”

Mayor Jim Kenney, who created a 20-member advisory group to think about the future of the refinery complex when PES shut down operations there after last year’s massive explosion and fire, welcomed the sale of what he called one of the most important commercial sites in the city. A report published by the advisory group in November, after six public meetings, concluded that a cleaner and safer use of the land was desirable.

“The action creates jobs, ensures the future commercial viability of the site, and decreases the former refinery’s environmental impact,” Kenney said in a statement. “I am hopeful that Hilco’s vision for the refinery site will be consistent with the values and priorities we heard throughout the Refinery Advisory Group process last year.”

According to Hilco executives, the site’s redevelopment will create 18,000 jobs in the next 10 years — 8,000 union construction jobs and 10,000 permanent jobs — and “rely heavily on local unions and local trades.”

“Hilco officials have assured me they will have a serious commitment to diversity and inclusion for the facility, plus will make sure that as many local residents as possible get these new jobs. I look forward to working with community stakeholders for a bright new future for the property,”  City Councilmember Kenyatta Johnson, whose district includes the property, said in a statement.

A landmark anniversary

Exactly one year ago, Philadelphia Energy Solutions CEO Mark Smith announced the permanent shutdown of the refinery complex, which ended the jobs of more than 1,000 employees, about 600 of them unionized. Five days earlier, on June 21, 2019, the explosion and resulting fire partially destroyed one of the two refineries in the complex and released more than 5,000 pounds of one of the most dangerous industrial chemicals in use, hydrofluoric acid, threatening the city with a catastrophe.

Sale of the refinery complex ends an important piece of the lengthy and complicated restructuring process that started last July 21, when PES filed for Chapter 11 bankruptcy for the second time in two years.

According to court records, PES contacted 223 potential buyers in August 2019, 15 parties indicated interest in the first round of bidding in September, four parties presented binding bids, and two — Hilco and Industrial Realty Group in partnership with former Philadelphia Energy Solutions CEO Phil Rinaldi — participated in an auction in New York City, behind closed doors, on Jan. 17. PES selected Hilco as the winner with a $240 million bid, and the sale was approved by U.S. Bankruptcy Judge Kevin Gross on Feb. 13.

When asked to comment about the completion of the Hilco purchase, Smith wrote in an email that he did not have any comments to share.

“It’s dead, it’s done. And that’s hard to accept for a lot of people,” said Robert Campbell, who worked at the refinery for over 20 years.

Campbell had a well-paying union job he thought he was going to do until he retired. After being unemployed for six months, he got a job driving a truck. But then the coronavirus put him out of work again. And he said he’s not the only former refinery worker who still doesn’t have a job.

Personally, he said, he feels more anger than sadness about how the process went down.

“I think everybody from Philly Thrive to upper management, who were still getting huge bonuses on top of their salaries, everybody took it out on the guys who went in and worked there,” he said. “I feel the workers were, across the board, everybody’s scapegoats.”

Follow PlanPhilly

Environmental advocates rejoice

After hearing the news, Sonya Sanders, a longtime South Philadelphia resident who lost her husband to cancer earlier this year, said she could now finally rest and start to heal.

“This is a huge, huge victory,” she said. “It’s 150 years… that chapter has an end. This is not just my fight, but my mother’s and my grandma’s fight. It’s been generations who have lived in this community.”

On Monday, Sanders and members of Philly Thrive, an environmental justice organization that has led the opposition to the refinery for years, celebrated the first anniversary of its closure and demanded that the City of Philadelphia not extend the Keystone Opportunity Zone designation for the site or grant it any further tax breaks.

City Council approved a bill extending those taxes on Thursday, with just one dissenting vote.

“We’ve been waiting for this for a long time,” Philly Thrive’s Jendaiya Hill said of the refinery’s sale to Hilco. “But we’re demanding that Hilco is 1000% invested with us in this process.”

In the interview with WHYY, Hilco’s Perez committed again to working with the community and hiring local workforce to redevelop the site.

“We will systematically and proactively have an all-inclusive outreach to all stakeholders. And we look forward to getting to know them, hearing their feedback and incorporating some of their concepts into our greater redevelopment plan,” he said.

Energy and environmental observers welcomed the news.

“Not having a refinery there ends a long environmental justice travesty and puts Philadelphia on the right side of energy history. Having a new owner who takes a long view on improvements to the site and on the possibilities for many potential reuses lets us be a city of what’s next rather of what was,” said Mark Allan Hughes, director of the University of Pennsylvania’s Kleinman Center for Energy Policy and head of the city Refinery Advisory Group’s environmental committee.

Pete DeCarlo, an air-quality expert and former Drexel professor now with Johns Hopkins University, said the sale of the refinery will finally begin a long process of undoing 150 years of environmental damage caused in South Philadelphia by oil refining activities. The PES refinery was the biggest stationary polluter in Philadelphia.

“While the active emissions of pollutants have stopped, the legacy pollutants will continue to be an issue that must be tracked and monitored to protect the health of communities in the immediate area,” said DeCarlo, also a member of the Refinery Advisory Group. “There is a long way to go, but this is an important and huge first step of that process.”

Want a digest of WHYY’s programs, events & stories? Sign up for our weekly newsletter.

Together we can reach 100% of WHYY’s fiscal year goal