Associated Press - Refinery sells at auction

Refinery sells at auction

SOMERSET, Ky. (AP) _ The historic Somerset Refinery sold at auction for $2.2 million and could be back in operation by early next year.

The Lexington Herald-Leader reported Saturday that Michael Grunberg, managing principal of Grunberg Realty in New York, will pay a total of $2.42 million, with sales costs, for the parent company of the refinery, PHS Group.

The refinery is off U.S. 27 in Somerset and has a 5,500-barrel per day refining capacity. The property includes offices, dozens of tanker trucks, a pipeline easement across six counties and 12 Somerset Oil service stations in southern and eastern Kentucky.

The refinery had been turning crude oil into gasoline for generations before it ran into financial trouble and shut down in late 2006. At one time, it employed 150 workers.

The auction was part of a bankruptcy proceeding that began in May 2007.

Grunberg says he's committed to putting the refinery back into operation and thinks he can do it in four or five months.

``My interest is to keep things going and to make them profitable,'' he said.

Grunberg's company owns and manages commercial and residential buildings in New York and other cities. The refinery is its first foray into Kentucky and the oil business.

``In times like these, we wish to diversify,'' he said.

The Somerset refinery opened in the early 1930s and was one of only two in the state. Since it closed, oil producers in southern Kentucky have faced higher costs to take their product elsewhere, said John Gabbard, executive director of the Kentucky Oil and Gas Association, which represents producers.