Oct. 20--Tulsa's two oil refineries soon will have the same owner.

Dallas-based Holly Corp. announced Tuesday it has a definitive agreement with Sinclair Oil Corp. to buy its Tulsa refinery for $128.5 million. Holly bought the Sunoco refinery only five months ago.

"It's a powerful combination," Holly spokesman Neale Hickerson said. "One plus one equals 3."

The deal, subject to regulatory approval, could be completed by the end of the year, he added. The two facilities, once coordinated, would give Holly about 120,000 barrels per day in Tulsa processing capacity.

Two key attractions of the Sinclair plant was its capability to produce ultra low sulfur diesel and further finish gas oil into gasoline and diesel. Holly had planned to spend $150 million on upgrading the old Sunoco refinery so it could produce ultra low sulfur diesel by 2011.

"It really eliminates the need to do that $150 million project," Hickerson said. "Our choices were to do nothing and spend $150 million (at Sunoco) or spend $125 million plus a little more to get to the same place and an additional 40,000 barrels.

Rumors about an impending Sinclair sale surfaced in recent months after the Utah-based private company shelved completion of a planned $1 billion expansion and upgrade project over several years. Holly's Hickerson pointed out that Sinclair already has spent about $300 million in upgrades.

Sinclair estimated the total value of the deal at $300 million, including inventory purchases. The seller also expects that Holly will

keep most of the 298 workers now employed at the Sinclair refinery.

The company has no plans to exit its marketing business, according to a release. Sinclair supplies refined petroleum products throughout the mid-continent, upper Midwest and Rocky Mountain regions.

"The long-term off-take agreement Sinclair received in this transaction will enable us to continue marketing refined products to our branded and unbranded wholesale customers," Sinclair spokesman Clint Ensign said in a statement.

Tulsa Metro Chamber CEO Mike Neal thanked Holly for doubling its investment in the city.

"Holly Corp's acquisition of Tulsa's Sinclair and Sunoco refineries are among the largest economic development transactions in the nation this year," Neal said in a statement. "Holly Corp. is an aggressive, proactive energy leader and their presence in Tulsa is already returning huge dividends to the community."

At closing Holly and Sinclair Oil Corp. will enter into a long-term agreement in which Holly provides up to 50,000 barrels per day of gasoline and diesel to Sinclair's marketing network throughout the midwest.

Holly will buy the 75,000 barrel-per-day plant, 2.3 million barrels of storage capacity and Sinclair's inventory of approximately 500,000 barrels at the time of closing. The buyer plans to integrate and streamline this facility with its existing 85,000 barrel per day Tulsa refinery, according to a company statement.

Subsidiary Holly Energy Partners will purchase 1.4 million barrels of additional storage at the Sinclair facility, as well as asphalt and propane loading racks and a product delivery pipeline. Holly also plans to use existing third-party pipelines and, if necessary, build new pipelines to link the two refineries that are two miles apart along the Arkansas River.

Holly, which formed in 1942, has undergone an extensive growth period over the past year. The Dallas company bought the 96-year-old Sunoco facility, which employs about 366 people, for $65 million to go along with refineries in New Mexico and Utah.

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