TrailStone Group, a start-up commodity merchant backed by private equity firm Riverstone Holdings LLC, has retained Tudor Pickering & Holt to sell or find strategic alternatives for its Tacoma, Washington refinery, two people familiar with the transaction said on Thursday.
The refinery, known as U.S. Oil, needs a capital infusion to pursue additional projects, including plans to expand into renewable energy, one of the people said.
"We hope to identify a partner/investor with significantly added liquidity and capital willing to embrace all that we have and protect and maintain our approach while also competing effectively in a very dynamic, rapidly-changing energy economy," Marcia Nielsen, a refinery spokeswoman, said in response to questions from Reuters.
TrailStone bought the 42,000 barrel-per-day refinery in Tacoma, Washington for an undisclosed amount in 2014, and did not reveal how much it hoped to gain from a sale. The plant could fetch more than $500 million in an outright sale, one of the people said. The refinery has a dedicated jet fuel pipeline to Joint Base Lewis-McChord, a U.S. military installation close to the plant.
Refineries on the West and East Coasts benefited for several years from a deep discount on railing oil out of North Dakota's Bakken shale play, but oil markets have shifted since TrailStone's purchase of the refinery.
In the past six months TrailStone has downsized its U.S. and European offices, letting go of 20 people in its offices in Austin, London and other locations, representing about 15 percent of its global headcount.
TrailStone officials did not immediately respond to requests for comment.
TrailStone first entered North American physical oil markets with the June 2014 purchase of the small refinery and logistics firm in the Pacific Northwest.
The refinery also includes 2.7 million barrels of storage capacity, a fleet of 630 rail cars, several barges, and a deepwater terminal along the coast. It started receiving about 40,000 barrels of Bakken crude daily in November 2012 when its offloading operation began.
Crude prices nationwide fell in the years after the purchase due to new supply from U.S. shale formations. That eroded the Bakken discount that made refining profitable for some refiners that rely on rail transport.
The completion of several pipelines out of the Bakken region has made the price of that oil more comparable to other grades. Crude-by-rail volumes have plunged, as those pipelines now connect the Bakken to lucrative markets in the Gulf and Midwest.
Reporting by David French and Jessica Resnick-Ault