The storage tanks and towers at the Puget Sound Refinery. Credit: Walter Siegmund (talk)/Wikipeida.org.

Royal Dutch Shell has agreed to divest its Puget Sound Refinery in the US to refiner HollyFrontier.

HollyFrontier will purchase the refinery, the on-site cogeneration facility, as well as related logistics assets, for $350m in cash plus the value of the hydrocarbon inventory.

The hydrocarbon inventory will be valued on closing of the deal. The current value is estimated to be in the range of $150m to $180m.

The deal also covers the product offtake agreements in support of Shell’s existing Pacific Northwest retail marketing business.

It also includes a deep-water marine dock, a light product loading rack, a rail terminal, and storage tanks.

The sale is a part of the Dutch firm’s plans to reduce its global refinery footprint to core sites.

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Shell said these core sites, together with the company’s trading hubs, chemicals plants and marketing businesses, will be equipped to produce more low-carbon fuels and speciality chemicals.

Shell manufacturing executive vice-president Robin Mooldijk said: “This is another step towards reshaping our refining portfolio to drive resilient returns.

“HollyFrontier is a strong operator and we believe they will continue the refinery’s legacy of prioritizing safety, environmental performance and care for people at the site and within the community.”

The agreement, however, excludes Shell’s off-site logistics assets.

HollyFrontier president and CEO Mike Jennings said: “We believe that the Puget Sound Refinery will complement our existing refining business, with sales into premium product markets and advantaged access to Canadian crude.”

Subject to regulatory clearance and other customary closing conditions, the transaction is planned for completion in the fourth quarter of 2021.

With approximately 149,000 barrels per day of crude oil processing capacity, the Puget Sound Refinery comprises catalytic cracking and delayed coking units.