This page contain information copyrighted by other individuals and entities. Copyrighted material displayed in this page is done so for archival purposes only and is not intended to infringe upon the ownership rights of the original owners.
Peerless Oil & Chemicals Inc. (ID: 14969)
Page 1 of 1 [Back to companies list]
History of Peerless Oil & Chemicals, Inc. Today's Peerless Oil & Chemicals, Inc. started as Peerless Petrochemicals Inc., distributing solvent chemicals for manufacturers in the New York City area shortly after World War II. Puerto Rican operations began in the mid-1950's when Peerless acquired a 15 acre site on the south coast of Puerto Rico close to Ponce with access to the Caribbean sea in Penuelas. In 1966 Peerless began the design and construction of a manufacturing complex to process a naphtha feedstock into special aliphatic petroleum solvents (specialized high purity hexane and heptane cuts) using by-product raffinate from nearby refinery petrochemicals operations. From 1968-1972 Peerless operated as an integrated manufacturing facility - marketing, designing and tailoring specialized products to the printing ink, edible oils and synthetic rubber markets and shipping products to the United States Gulf and East Coasts to the end users. In 1972 Peerless sold its marketing activities to the Ashland Chemical Division of the Ashland Oil Company. From then to 1977, Peerless' special solvents were sold FOB plant to Ashland for final distribution. From 1973 to 1977, market distortions affected feedstock availability and product realization. The rise of OPEC and the administration of government controls over the oil industry resulted in unpredictable and adverse impacts on feedstock supplies and downstream users. In 1977 a decision was made to convert the Peerless facility to a 10,000 barrel per day crude oil refinery capable of producing fuels products and petrochemical intermediates from light sweet crude oils. The facilities in Penuelas were improved to the tune of $2.2 million and the unit restarted as a refinery in mid-1978. The phase out of U.S. crude price controls and the resultant 3-tier pricing system among refiners sharply reduced the economics for Peerless and other small independent refiners. In 1981 Peerless suspended its crude oil refining operations but continued to maintain the facility against a future market scenario affording re-start of the operation. During 1980, Peerless undertook several entrepreneurial business activities in Puerto Rico and on the U.S. mainland. In Penuelas the refinery tankage was reconfigured, and a Terminalling Agreement was concluded between Peerless and Dow Chemical for receipt of Dow's specialty chemicals by barge. The chemicals were then distributed to Dow customers in Puerto Rico via trucks loaded at a chemical rack designed and constructed by Peerless for that purpose. Stateside, Peerless became an active player in shallow drilling for oil and natural gas. Peerless operated as a general partner in several investor-owned drilling programs. Meanwhile, the potential of Peerless' manufacturing facilities was not ignored - ongoing studies for crude oil refining, condensate processing and ethanol manufacture went forward in the mid-to-late 1980's. Price volatility and general weakness in the processing sector kept the manufacturing facilities in mothballs. In late 1987 a product niche for a Peerless processing scenario became apparent. The U.S. Defense Fuel Supply Center (DFSC) provided contract set-asides for small refiners who could manufacture specification military fuels products. The fit for Peerless was with Algerian Condensate, deemed a low value refinery feedstock because of its poor gasoline making quality, but an excellent source for the U.S. Air Force's JP-4 , a high altitude naphtha based military jet fuel. The advantage to Peerless vis-a-vis other U.S. small refiners was that while most domestic small refiners were inland with access to domestic stripper crudes, Peerless, being on the south coast of Puerto Rico lay directly on the shipping route from the Mediterranean sea to the Gulf coast, in a perfect position to pick up spot or contract cargoes of Algerian Condensate. Peerless was able to obtain a DFSC contract for one cargo per month of JP-4 (185,000 barrels) and two cargoes per year of military diesel F-76. The refinery was again reconfigured to process the more volatile condensate feedstock, with special attention paid to processing for the very stringent freeze, smoke and vapor pressure requirements of a military specialty jet fuel. The reconfigured refinery was started in March 1989, with the first cargo lifted by the U.S. Air Force Sea Lift Command in May 1989. The Peerless operation produced approximately one cargo a month from May 1989 to January 1994, when the Air Force terminated use of JP-4 in favor of a kerosene-based jet fuel. Peerless provided both JP-4 and F-76 diesel to the Air Force during this period including 1990-1991 Desert Storm activities in the Persian Gulf. With the phase-out of JP-4, Peerless determined that the existing distillation complex could not economically produce an economic kerosene-based jet fuel because of the low percentage yield from any commercially available crude feedstock. A new grass roots refining complex was designed, incorporating used equipment actually available near the present Peerless site for a possible future project. In anticipation of the time when Peerless did not have a viable refinery operating scenario, Peerless began in 1990 to seek a role in the gasoline distribution business in Puerto Rico. The island is a 65,000+ barrel per day gasoline market with customers and terminals located near San Juan but with a sizable distribution opportunity in the southern and western part of the island, serviced either from Phillips in Guayama or the major oil company distribution terminals in Catano in the San Juan area. Peerless undertook to obtain permits and to construct a state-of-the-art facility to distribute gasoline, initially blending refinery component by-products from its own JP-4 operation and other components refined and/or delivered by Sun Oil in Yabucoa, Puerto Rico. The Peerless gasoline loading rack started up in July 1991 and quickly achieved a 15% market share in Puerto Rico. In 1990 Peerless began negotiations with Union Carbide to purchase their oil terminal, which had been operating as a contractor to Peerless during the JP-4 operation. The control of the Carbide tankage (20 tanks of a capacity approximately 1.4 million barrels), 125 acres of prime industrial land, office and warehouse buildings and the exclusive operating franchise of the Punta Gotay marine dock facility in Guayanilla Bay passed to Peerless in a sale completed in September 1996. Thus today Peerless Oil & Chemicals has approximately 140 acres of prime industrial land comprising the dock, 33 tanks, the loading racks and the processing facility. As part of the financing package for this major purchase, Peerless used a short term credit facility with Puerto Rico's Economic Development Bank. The loan was completely repaid ahead of schedule from operating income of the facility. In 1994 Peerless reconfigured its processing unit to rerun gasoline blending components for Sun Oil to meet the "Anti-Dumping" requirements of the 1990 Clean Air Act (which required, among other things, that a refiner's non-reformulated gasoline should not result in excessive benzene emissions from automobiles.) Peerless' distillation towers removed the benzene in a heart-cut suitable for sale to petrochemical operations, while producing a less than 0.5% benzene finished gasoline. The unit operated until early 1996 when Sun Oil determined they could meet conventional gasoline blending requirements by operational changes in their U.S. refineries. In 1994-1995 the Puerto Rican gasoline market became significantly more complex. The marketing majors -- Texaco, Shell and Exxon increased the R+M/2 octane rating of their premium grade to 93, while the Independents stayed at 91. Further in 1995, Shell introduced a 89 R+M/2 regular, while all other marketers remained at 87. Peerless added a third loading bay to its rack in 1994 and designed a configuration to enable it to supply all four gasoline grades simultaneously. Even today, while Shell has returned to an 87 octane regular, Peerless has the only gasoline loading facility in Puerto Rico retaining this four-grade loading capability. Peerless continues to be a niche player in the refining, terminalling, marine operations and distribution sectors of the Puerto Rico oil business. We continue to see deployment for our tankage and processing assets as well as for the expertise of our personnel. In April 2000 the U.S. Commerce Department approved an application by Peerless and CODEZOL to designate Peerless as a General Purpose Expansion Site of the Foreign Trade Zone #163, which is administered by CODEZOL. On June 9, 2000 U.S. Customs granted activation status. We perceive this development as another favorable evolution in our ability to efficiently serve the Puerto Rico energy sector. Today's Peerless Oil & Chemicals, Inc. started as Peerless Petrochemicals Inc., distributing solvent chemicals for manufacturers in the New York ... Peerless Oil & Chemicals Inc.