Philly Council sends a message: ‘Sustainable’ bidders welcome for bankrupt oil refinery

Philadelphia City Council on Thursday urged bidders for the bankrupt Philadelphia Energy Solutions refinery to adopt the city’s clean-energy goals, an unwelcome signal to potential buyers who might revive the facility to process fossil fuels.

The council resolution, which carries no legal weight but contains a clear political message, voices its “strong interest” and “enthusiastic support” for bids that align with the city’s goals to improve air quality, reduce greenhouse gas emissions, and protect the health, safety, and welfare of Philadelphia residents.

Fifteen potential bidders have submitted written indications of interest in PES, the East Coast’s largest refinery, which shut down and declared bankruptcy after a devastating June 21 fire and explosion. Bidders have until Friday to submit proposals to qualify for the final bidding process, which will take place in January.

At least two parties have proposed producing fuel on the 1,300-acre site, and both include renewable energy components as part of their proposals. Several other energy companies have suggested converting it into a fuel terminal that would take advantage of the site’s access to sea, rail, highway, and airport. PES has not identified any potential bidders in court.

Council’s action is timed to encourage “sustainable businesses” to submit bids by Friday’s deadline.

Councilwoman Blondell Reynolds Brown, the resolution’s author, rallied environmental advocates in recent days to testify on behalf of the resolution, and 39 of them signed a letter of support. “We are at a critical juncture for the future of our city,” she said in introducing the resolution.

The resolution singles out the refinery, which has operated in South Philadelphia for 150 years, as “the largest stationary source of toxic air pollution in Philadelphia and the city’s single-largest industrial contributor of greenhouse gases.” It also cited the refinery’s proximity to “environmental justice areas,” populated by many low-income residents and by people of color.

U.S. Bankruptcy Court Judge Kevin Gross on Nov. 14 approved bidding procedures for the PES property, which require the company to disclose the names of the bidders to the city, and to consult with authorized city representatives about the property’s future use during the auction.

» READ MORE: Explosion-damaged South Philadelphia refinery files for bankruptcy, again

The land is already zoned industrial, so continued use as a refinery would not require additional council approval. But the resolution says that the city’s Air Management Services “is working on a regulation to require health risk assessments for new, modified, and existing air pollution sources," which indicates the city may create an additional legal obstacle for a new owner.

In court filings, PES has said bankruptcy law requires it to favor the highest-value bid for the property to generate the greatest cost recovery for creditors. Most of the refinery was undamaged by the June 21 explosion.

The refinery employed 1,100 people before its closure, and had an annual payroll of $100 million, not including payments to thousands of contractors.

In other refinery matters, Council’s joint committees on the environment and legislative oversight has scheduled a hearing for 10 a.m. Friday to assess options for the future of the refinery site.