PES refinery lays off all but select few union workers, despite safety concerns

Updated: 10:33 a.m. Aug. 21

The Philadelphia Energy Solutions refinery in South Philadelphia has laid off all union workers except a select few. That includes about 200 maintenance workers and about as many operators.

The laid-off workers will be paid through Aug. 25, which was supposed to be their last day.

The refinery, which has been closed since a fire broke out in its alkylation unit in June, already had let 80 workers go last Thursday, more than a week ahead of schedule. As recently as Monday, union leaders said the refinery was warming to the idea of leaving a caretaker crew of union workers on permanently after Aug. 25, but those negotiations seem to have stalled.

“There’s still hydrocarbons in the lines,” United Steelworkers Local 10-1 president Ryan O’Callaghan said Tuesday. “There’s still hydrocarbons in the tanks, there’s still catalysts in the reactors, and you need operators and maintenance people that know how to deal with that and deal with that every day, not some manager who read it in a book.”

“It’s a mismanaged mess,” he said.

A Philadelphia Energy Solutions representative did not respond Tuesday to several WHYY News requests for comment.

In a statement sent Wednesday morning, PES chief executive officer Mark Smith said: “Since the fire on June 21, PES has shut down the refinery and taken measures to preserve the facility for sale and restart as previously stated. The refining complex has completed the idling of a majority of the equipment. We are releasing employees this week in accordance with previous announcements. PES will maintain a caretaker staff at the facility to complete a number of ongoing projects and ensure the safe and environmentally compliant operations at the refinery site.”

“We realize this is a very difficult situation for our employees, their families, the community, and the City of Philadelphia,” the statement continued. “We thank our employees for their many years of dedication and service and are grateful for the support from City, State, and Federal agencies through this challenging transition.”

PES, owner of the 335,000-barrel-per-day refinery — the largest on the East Coast — entered Chapter 11 bankruptcy on July 21 for the second time in two years. According to Reuters, the company is running out of money and, without access to $1 billion in insurance funds, is under increasing financial pressure to find a buyer.

O’Callaghan said he has met with a prospective buyer of the shuttered refinery, who might make a bid as soon as next week, but he declined to name the company.

“We’re still going to engage with any potential buyer so this place can run,” O’Callaghan said. “It can run right now.”

Workers, community members, and politicians across the political spectrum have had differing ideas about the future use of the 1,300-acre property, but with time running out, a group of politicians and workers met Monday at the Steamfitters Local 420 union hall in Northeast Philadelphia to call for a smooth transition to another refining business.

“With all the jobs that are slated to be lost, we’d prefer [PES] stay,” said Republican U.S. Rep. Brian Fitzpatrick, who led the meeting with union leaders and other politicians. “But if they are decisive about leaving, [we ask] that they leave in a way that’s going to preserve the property for future use.”

Democratic U.S. Rep. Dwight Evans also participated in the meeting and said the transition needs to be handled in a safe and secure fashion, with a focus on both the community and workers.

“This is very devastating to our region,” Evans said. “We need to be vigilant in paying attention to this.”

Fitzpatrick said that all options should be on the table, but that another refining business would be the most obvious type of buyer.

“This parcel has been used for refining oil for over 150 years, so that’s the easiest transition is to remain in that usage,” Fitzpatrick said. “Trying to transition that to some other use, it’s not impossible, but it’s incredibly difficult.”

Fitzpatrick sits on the House Committee on Transportation and Infrastructure, which has jurisdiction over issues related to pipelines and hazardous materials. In that capacity, he has sent a letter to Energy Secretary Rick Perry and the Federal Energy Regulatory Committee to urge action on the behalf of the PES workers.

Although Reuters reported that three companies had been in contact with PES about a potential purchase, it was not immediately clear who those buyers were or how quickly a deal could come together before the company was forced to liquidate.

Fitzpatrick said he was open to looking at ways the federal government could sweeten the deal, to attract buyers.

“There’s always options, financial incentives we can provide, should we get bipartisan support to do it,” he said. “We’re going to explore every single option to keep this running and keep these jobs here.”

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This article was updated to include efforts to contact PES directly and a company statement to Reuters.