Jul. 22--Sinclair Oil Co. may be looking for a possible buyer of its west Tulsa refinery, only two years after announcing a $1 billion expansion that's now put on hold, according to industry reports Wednesday.

The Oil Price Information Service, quoting the Oil Express newsletter, wrote that Sinclair retained J.P. Morgan earlier this summer to start the sale process. A spokeswoman for privately held Sinclair would not comment on the rumors.

The OPIS story, quoting anonymous sources, said Sinclair originally wanted to turn the refinery into a joint venture but recently considered an outright sale.

Others connected to Tulsa's energy sector said they, too, have heard talk about a sale effort. One rumor has Holly Corp., which recently bought the Sunoco Refinery for $65 million, making inquiries into owning the other plant down the Arkansas River.

Holly spokesman Neale Hickerson would not confirm or deny whether his company was interested. He also could not say if J.P. Morgan had contacted Holly executives about the plant.

However, Hickerson admitted that Holly is seen as an up-and-coming customer for such facilities that may be under the bigger oil companies' radars.

The recession, lower demand, tighter refining margins and environmental pressures may be squeezing some current refinery owners, sources say. For instance, Sunoco's refinery was valued at close to $500 million, but stayed on the market for nearly 18 months, according to reports.

"There's a very short list of buyers who might want -- and have the wherewithal -- to buy them," Hickerson said.

"We look at a ton of stuff."

Sinclair Tulsa Refining Co. spokesman John Goodwin could not be reached for comment Wednesday. Last week, Goodwin denied rumors that the plant was up for sale, but did confirm that the $1 billion expansion was on hold indefinitely due to "external economics."

A $35 million environmental upgrade is under way, according to reports. The improvements are part of a federal settlement over air emissions.

Goodwin has talked openly and admiringly about Holly's emergence in Tulsa. "I think it's good for all of us," he said last week. "They're a good company, and it's good to have them in town."

The Dallas-based company plans to undertake $150 million worth of upgrades to meet mandates for ultra low sulfur diesel. Sunoco was going to mothball its refining operations and became a terminal storage site if no buyer was found.

Preliminary engineering on the old Sunoco upgrades begins later this year, with construction starting next year and completed by 2011, according to reports. Holly will add a new diesel hydrotreater and sulfur recovery unit.

Hickerson was careful not to imply Holly was going after the Sinclair plant, but he said he believes that such a deal could pass regulatory muster. The amount of refined petroleum products coming into the Mid-Continent from the Gulf Coast and terminal and pipeline operations such as Magellan Midstream Partners should ensure that viable market competition exists, he added.

Sinclair and Holly also have good working relationships, officials say. "We know the Sinclair folks pretty and supply them in Utah and the Southwest," Hickerson said. "They're good operators."

The Sinclair Tulsa refinery processes about 65,000 barrels per day and employs close to 300 people. The company announced its expansion in 2007, promising to add hundreds of jobs, increase production by 60 percent and cut back on air emissions.

The engineering and preparatory work began last year, but the expansion was stopped.

Some parts, such as coker drums, were even delivered via barge but sit idle at the Tulsa Port of Catoosa. Utah-based Sinclair bought the refinery from Texaco USA in 1983. The refinery was built in 1910 by Texas Co., later known as Texaco.

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