Flying J closes California refinery, president/CEO resigns

CRYSTAL CALL MAGGELET

The Trucker News Services

1/30/2009

SALT LAKE CITY — Flying J, which filed for bankruptcy last month, has shut down an oil refinery in California because it doesn't have cash to buy crude to feed the operation, according to an article in the Salt Lake Tribune.

The closure does not affect Flying J's other refinery in North Salt Lake, spokesman Tom Davies told the newspaper.

The announcement comes just over a week after Flying J's longtime president and chief executive officer resigned abruptly.

J. Phillip Adams was replaced by Crystal Call Maggelet, chairman of the board and daughter of Flying J founder Jay Call, the company announced in a news release.

Ogden, Utah-based Flying J and two of its subsidiariess filed for Chapter 11 bankruptcy protection, citing a steep drop in oil prices and the lack of available financing tied to disruptions in the credit markets.

"We will be winding down refining operations at the [Bakersfield, Calif.] facility as we continue to explore opportunities," Fred Greener, executive vice president of Flying J subsidiary Big West of California, said in a statement.

"We hope that this suspension will be short-lived, and are working very hard to find a solution that will allow resumption of operations. However, at this time, we cannot predict when that might occur," Greener said.

The 70,000-barrel-per-day Bakersfield refinery supplies 6 percent of California's diesel and 2 percent of the state's gasoline.

The capacity of the refinery in North Salt Lake is 29,400 barrels per day.

Big West has been striving to find oil supplies for the Bakersfield refinery since Flying J filed for bankruptcy on Dec. 22.

"Following the Chapter 11 filing … we have not had the cash liquidity needed to purchase crude in the necessary types and quantities under the terms being offered by suppliers," Greener said.

"We are continuing to evaluate the full range of options, but we have been unsuccessful in our efforts thus far to find a workable solution," he said.

The disruption has not affected the North Salt Lake refinery, which continues to operate normally.

In a brief interview last month with the Salt Lake City newspaper, Adams said the decision to seek bankruptcy protection was painful for Flying J, which has grown to be one of the 20 largest private companies in the United States.

Peter Hill, a Flying J spokesman, said the company would not discuss the reasons for Adams's departure.

In a statement, the company thanked Adams for his contributions during his 26-year career and wished him well.

"Given the challenges our company is facing, however, it is essential that we look forward," Maggelet said in the statement.

Maggelet has served on Flying J's board for more than 20 years. With her husband she owns a regional chain of hotels called Crystal Inn and has a masters of business administration degree from Harvard University.

Flying J is one of the first energy companies to file for bankruptcy after an extraordinary year that saw crude oil prices streak to a record high of $147 a barrel in July, only to fall to under $40 by the close of 2008.

In the statement, Maggelet said Flying J is "receiving tremendous counsel and support from our team of restructuring experts."

The Trucker staff can be reached to comment on this article at editor@thetrucker.com.