What changed in this filing

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Item 1. Business

2021-03-08 compared with 2020-03-02 · 212 added, 197 removed, 377 unchanged (52% of the section changed)

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Our business is organized into three primary segments:

1) Refining - We own and operate four refineries with total throughput capacity of over 200 Mbpd .

1) Refining - We own and operate four refineries, including one idled refinery, with total operating throughput capacity of over 150 Mbpd.

Our refineries in Kapolei, Hawaii, produce ultra-low sulfur diesel (“ULSD”), gasoline, jet fuel, marine fuel, low sulfur fuel oil (“LSFO”), and other associated refined products primarily for consumption in Hawaii.

We idled one of our Kapolei refineries in the first quarter of 2020 for economic reasons.

Our refinery in Newcastle, Wyoming, produces gasoline, ULSD, jet fuel, and other associated refined products that are primarily marketed in Wyoming and South Dakota.

Our refinery in Tacoma, Washington, produces distillates, gasoline, asphalt, and other associated refined products that are primarily marketed in the Pacific Northwest.

2) Retail - We operate 124 retail outlets in Hawaii, Washington, and Idaho.

Our retail outlets in Hawaii sell gasoline, diesel, and retail merchandise throughout the islands of Oahu, Maui, Hawaii, and Kauai.

Our Hawaii retail network includes Hele and “76” branded retail sites, company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations.

In addition to the rebranding of 40 of our fueling stations in Hawaii to Hele as of December 31, 2019 , we rebranded 28 of our 34 company-operated convenience stores in Hawaii to “nomnom,” a new proprietary brand.

2) Retail - We operate 123 fuel retail outlets in Hawaii, Washington, and Idaho.

Our fuel retail outlets in Hawaii sell gasoline and diesel throughout the islands of Oahu, Maui, Hawaii, and Kauai.

We operate convenience stores at 34 of our Hawaii retail fuel outlets that sell merchandise such as soft drinks, prepared foods, and other sundries.

Our Hawaii retail network includes Hele and “76” branded fuel retail sites, company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations.

Through December 31, 2020, we rebranded 42 of our fueling stations in Hawaii to Hele (the Hawaiian word for movement or “let’s go”) and all 34 company-operated convenience stores in Hawaii to “nomnom,” a new proprietary brand.

Our retail outlets in Washington and Idaho sell gasoline, diesel, and retail merchandise and operate under the “Cenex®” and “Zip Trip®” brand names.

We began to rebrand our 33 Washington and Idaho locations during December 2020 to “nomnom” and the rebranding of four sites was completed as of December 31, 2020.

3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rockies.

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We own and operate a crude oil pipeline gathering system, a refined products pipeline, storage facilities, and loading racks in Wyoming and a jet fuel storage facility and pipeline that serve Ellsworth Air Force Base in South Dakota.

We own and operate logistics assets in Washington, including a marine terminal, a unit train-capable rail loading terminal, storage facilities, a truck rack, and a proprietary pipeline that serves McChord Air Force Base.

In 2020, we completed a project at our Tacoma, Washington, location to allow for the storage and shipment of ethanol through our unit train and marine terminals.

We also own a 46.0% equity investment in Laramie Energy, LLC (“Laramie Energy”), a joint venture entity focused on producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado.

Impacts of the COVID-19 Pandemic

The spread and severity of a new coronavirus, referred to as COVID-19, in conjunction with government and other preventative measures taken to mitigate the spread of the virus, have caused severe disruptions in the worldwide economy, including the global demand for crude oil and refined products, the movement of people and goods in the United States, and the global supply chain for industrial and commercial production, all of which have in turn disrupted our businesses and operations and impacted our financial performance in 2020.

We continue to actively monitor the impact of the global situation on our people, operations, financial condition, liquidity, suppliers, customers, and industry, and are actively responding to the impacts that these matters have on our business.

Please read Item 1A.

— Risk Factors and Item 7.

— Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview for further discussion of the risks, uncertainties, and actions we have taken in response to the global COVID-19 pandemic and resulting economic impact.

On January 9, 2018, we entered into an Asset Purchase Agreement with CHS Inc.

to acquire twenty-one ( 21 ) owned retail gasoline, convenience store facilities and twelve ( 12 ) leased retail gasoline, convenience store facilities, all at various locations in Washington and Idaho (collectively, “ Northwest Retail ”).

to acquire twenty-one (21) owned retail gasoline, convenience store facilities and twelve (12) leased retail gasoline, convenience store facilities at various locations in Washington and Idaho (collectively, “Northwest Retail”).

On March 23, 2018, we completed the acquisition for cash consideration of approximately $74.5 million (the “Northwest Retail Acquisition”).

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On August 29, 2018, we entered into a Topping Unit Purchase Agreement with IES Downstream, LLC (“IES”) to purchase certain of IES’s refining units and related assets in addition to certain hydrocarbon and non-hydrocarbon inventory (collectively, the “Par West Acquisition”).

On December 19, 2018 , we completed the asset purchase for total consideration of approximately $66.9 million , net of a $4.3 million receivable related to net working capital adjustments.

On December 19, 2018, we completed the Par West Acquisition for total consideration of approximately $66.9 million, net of a $4.3 million receivable related to net working capital adjustments.

The purchase price consisted of $47.6 million in cash and approximately 1.1 million shares of our common stock with a fair value of $19.3 million.

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Hawaii Refineries

Our Hawaii refineries are located in Kapolei, Hawaii, on the island of Oahu and are rated at a combined 148 Mbpd throughput capacity.

The Hawaii refineries ’ major processing units include crude distillation, vacuum distillation, visbreaking, hydrocracking, naphtha hydrotreating, diesel hydrotreating, and reforming units, which produce ULSD, gasoline, jet fuel, marine fuel, LSFO, HSFO, asphalt, and other associated refined products.

We believe the configuration of our Hawaii refineries uniquely fit the demands of the Hawaii market.

The Hawaii refineries consist of two refinery locations that are approximately two miles from one another.

Set forth below are summaries of the capacity of our Hawaii refineries as of December 31, 2019 :

Par East and Par West

Capacity (Mbpd)

Our Hawaii refineries are located in Kapolei, Hawaii, on the island of Oahu.

Our Par East refinery is rated at 94 Mbpd operating throughput capacity.

Our Par West refinery was idled in March 2020 and is currently not operational.

The Hawaii refineries’ major processing units include crude oil distillation, vacuum distillation, visbreaking, hydrocracking, naphtha hydrotreating, diesel hydrotreating, and reforming units, which produce liquified petroleum gas (“LPG”), naptha, gasoline, jet fuel, USLD, marine fuel, LSFO, high sulfur fuel oil (“HSFO”), asphalt, and other associated refined products.

We believe the configuration of our Hawaii refineries uniquely fits the demands of the Hawaii market.

As of December 31, 2020, the Hawaii

refineries consist of one operating refinery and one idle refinery with locations that are approximately two miles from one another.

Set forth below are summaries of the operating capacity of our Hawaii refineries as of December 31, 2020:

Par East and Par West Capacity (Mbpd)

Crude Oil Distillation Units (1) 94

Vacuum Distillation Units (1) 40

Hydrocracker 19

Catalytic Reformer 13

Visbreaker 11

Naphtha Hydrotreater 13

Diesel Hydrotreater 10

Par East and Par West

Par East and Par West Capacity

Hydrogen Plant (MMcfd) 18

Co-generation Turbine Unit (MW) (1) 20

We completed the construction of a new 10 Mbpd diesel hydrotreater unit during the third quarter of 2019 at a cost of approximately $27 million.

The new unit allows us to convert an additional five to seven Mbpd of intermediate products into jet fuel and/or ULSD and helps position us to meet Hawaii’s jet fuel and bunker fuel demands following the new regulations regarding marine fuels beginning in 2020 as set by the International Maritime Organization (“IMO 2020”).

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(1) Operating capacity of the Crude Oil Distillation Units, Vacuum Distillation Units, and Co-generation Turbine Unit excludes idled capacity of 54 Mbpd, 35 Mbpd, and 13 MW, respectively.

We source our crude oil for the Hawaii refineries from North America, Asia, Latin America, Africa, the Middle East, and other sources.

Crude oil is received into the Hawaii refineries’ tank farm, which includes 3.4 MMbbls of total owned crude oil storage and/or third-party crude oil storage.

We process the crude oil through various refining units into products and store them in the Hawaii refineries ’ owned 2.5 MMbbls of refined and additional third-party product storage.

We process the crude oil through various refining units into products and store them in the Hawaii refineries’ owned 3.3 MMbbls of refined product storage and additional third-party product storage.

This storage capacity allows us to manage the various product requirements of our customers.

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Aron prior to selling them to third parties.

The Hawaii refineries operated at an average combined throughput of 109.0 Mbpd, or 74% utilization, to meet local demand for the year ended December 31, 2019 .

The Par East refinery operated at an average combined crude oil throughput of 66.5 Mbpd, or 71% of crude oil utilization, to meet local demand for the year ended December 31, 2020.

Our Par West refinery was idled in March 2020 and is currently not operational.

In 2020, we executed a turnaround in Hawaii, which resulted in lower throughput and utilization outside of market conditions.

Below is a summary of our Hawaii refineries’ product yield percentages for the years ended December 31, 2020, 2019, and 2018:

Year Ended December 31,

2020 2019 2018

Combined Feedstocks Throughput (Mbpd) (1) 72.7 109.0 74.9

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Gasoline and gasoline blendstocks 24.6 % 23.0 % 27.1 %

Distillates 42.2 % 44.4 % 47.4 %

Fuel oils 29.5 % 20.3 % 17.8 %

Other products (0.7) % 8.7 % 4.5 %

Total yield 95.6 % 96.4 % 96.8 %

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(1) Feedstocks throughput and sales volumes per day for each of the Hawaii refineries for the year ended December 31, 2018 are calculated based on the 365-day period we owned the Par East refinery and the 13-day period for which we owned the Par West refinery.

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Wholesale customers include jobbers and other non-end users, as well as 47 locations where we deliver fuel to a location that subsequently sells the product at retail to the end user.

Bulk customers include utilities, airlines, military, marine vessels, industrial end-users, and exports.

Bulk customers include utilities, airlines, military, marine vessels, industrial end-users, and exporters.

The profitability of our Hawaii refining business is heavily influenced by crack spreads in the Singapore market.

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After completing the acquisition of Par West, we began shifting our Hawaii production profile to supply the local utilities with low sulfur fuel oil and significantly reduced our high sulfur fuel oil yield.

In 2020, following the implementation of IMO 2020, we established the 3-1-2 Singapore Crack Spread (or three barrels of Brent crude oil converted into one barrel of gasoline and two barrels of distillates (diesel and jet fuel)) as a new benchmark for our Hawaii operations.

By removing the high sulfur fuel oil reference in the index, we believe the 3-1-2 Singapore Crack Spread is the most representative market indicator of our current operations in Hawaii.

In 2020, following the implementation of new standards by the International Marine Organization (“IMO”) beginning in 2020, we established the 3-1-2 Singapore Crack Spread (or three barrels of Brent crude oil converted into one barrel of gasoline and two barrels of distillates (diesel and jet fuel)) as a new benchmark for our Hawaii operations.

The 3-1-2 Singapore Crack Spread averaged $3.15 per barrel during the year ended December 31, 2020 with a low of $(0.14) per barrel average in the second quarter and a high of $8.11 per barrel average in the first quarter.

Below is a summary of average crack spreads for the years ended December 31, 2020, 2019, and 2018:

Year Ended December 31,

4-1-2-1 Singapore Crack Spread

2020 2019 2018

3-1-2 Singapore Crack Spread

$ 3.15 $ 10.80 $ 10.90

Washington Refinery

Our Washington refinery is located in Tacoma, Washington, on approximately 139 fee-owned acres and is rated at 42 Mbpd throughput capacity.

The Washington refinery’s major processing units include crude distillation, vacuum, jet treating, diesel hydrotreating, isomerization, and reforming units, which produce distillates, gasoline, asphalt, and other associated refined products that are primarily marketed in the Pacific Northwest.

The Washington refinery’s major processing units include crude oil distillation, vacuum, jet treating, diesel hydrotreating, isomerization, and reforming units, which produce distillates, gasoline, asphalt, and other associated refined products that are primarily marketed in the Pacific Northwest.

We source our crude oil for the Washington refinery primarily from Canadian and Bakken producers as well as other North American sources.

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This storage capacity allows us to manage the various product requirements of our customers in the state of Washington and other targeted market destinations.

In 2020, 0.2 MMbbls of crude oil storage was repositioned as renewable fuels storage as part of the completion of our project to allow for storage and throughput of renewable fuels at the refinery.

We finance our Washington refinery hydrocarbon inventories through an intermediation arrangement (the “Washington Refinery Intermediation Agreement”) with Merrill Lynch Commodities, Inc.

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Set forth below is a summary of the capacity of our Washington refinery as of December 31, 2020:

Washington Refining Unit

Capacity (Mbpd)

Washington Refining Unit Capacity (Mbpd)

Crude Oil Distillation Unit 42

Vacuum Unit 19

Naptha Hydrotreaters 10

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Isomerization 4

The Washington refinery operated at an average throughput of 38.9 Mbpd , or 93% utilization, for the period from January 11, 2019 (the date of acquisition) to December 31, 2019 .

Below is a summary of the Washington refinery’s product yield percentages for the period from January 11, 2019 to December 31, 2019 :

January 11, 2019 to December 31, 2019

The Washington refinery operated at an average throughput of 39.1 Mbpd, or 93% utilization, for the year ended December 31, 2020.

Below is a summary of the Washington refinery’s product yield percentages for the year ended December 31, 2020 and the period from January 11, 2019 (the date of acquisition) to December 31, 2019:

Year Ended December 31, 2020 January 11, 2019 to December 31, 2019

Feedstocks Throughput (Mbpd) 39.1 38.9

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Gasoline and gasoline blendstocks 23.4 % 23.6 %

Distillates 35.3 % 35.6 %

Asphalt 18.8 % 18.9 %

Other products 19.8 % 19.4 %

Total yield 97.3 % 97.5 %

Our Washington refining business transports crude oil and refined products through our logistics network and sells refined products to wholesale, bulk, and retail customers primarily in the Pacific Northwest.

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The Pacific Northwest 5-2-2-1 Index is computed by taking two parts gasoline (sub-octane), two parts middle distillates (ULSD and jet fuel), and one part fuel oil as created from five barrels of Alaskan North Slope (“ANS”) crude oil.

The Pacific Northwest 5-2-2-1 Index averaged $15.02 per barrel during the period from January 11, 2019 to December 31, 2019 with a low of $11.09 per barrel average in the first quarter and a high of $17.14 per barrel average in the second quarter.

The Pacific Northwest 5-2-2-1 Index averaged $11.44 per barrel during the year ended December 31, 2020 with a low of $9.39 per barrel average in the third quarter and a high of $13.24 per barrel average in the first quarter.

Below is a summary of average crack spreads for the year ended December 31, 2020 and the period from January 11, 2019 (the date of acquisition) to December 31, 2019:

Year Ended December 31, 2020 January 11, 2019 to December 31, 2019

Pacific Northwest 5-2-2-1 Index

$ 11.44 $ 15.02

Wyoming Refinery

Our Wyoming refinery is located in Newcastle, Wyoming, on approximately 121 fee-owned acres and is rated at 18 Mbpd throughput capacity.

The Wyoming refinery’s major processing units include crude distillation, catalytic cracker, naphtha hydrotreating, and reforming units, which produce gasoline, ULSD, jet fuel, and other associated refined products.

We source our crude oil for the Wyoming refinery from local producers in the Petroleum Administration for Defense District IV Rocky Mountain (“PADD IV”) region of the United States as well as other North American sources.

The Wyoming refinery’s major processing units include crude oil distillation, catalytic cracker, naphtha hydrotreating, and reforming units, which produce gasoline, ULSD, jet fuel, and other associated refined products.

We source our crude oil for the Wyoming refinery from local producers in the Rocky Mountain region of the United States and North Dakota as well as other North American sources.

Most of the crude oil is delivered to the refinery via our owned pipeline network and the rest is delivered by truck.

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Set forth below is a summary of the capacity of our Wyoming refinery as of December 31, 2020:

Wyoming Refining Unit

Capacity (Mbpd)

Wyoming Refining Unit Capacity (Mbpd)

Crude Oil Distillation Unit 18

Residual Fluid Catalytic Cracker 7

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The Wyoming refinery operated at an average throughput of 12.3 Mbpd, or 68% utilization, for the year ended December 31, 2020.

In 2020, we executed a turnaround in Wyoming, which resulted in lower throughput and utilization outside of market conditions.

Below is a summary of the Wyoming refinery’s product yield percentages for the years ended December 31, 2020, 2019, and 2018:

Year Ended December 31,

2020 2019 2018

Feedstocks Throughput (Mbpd) 12.3 17.0 16.4

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Gasoline and gasoline blendstocks 49.2 % 49.6 % 49.5 %

Distillates 45.2 % 44.5 % 45.8 %

Fuel oil 1.9 % 1.7 % 1.6 %

Other products 1.3 % 1.6 % 0.8 %

Our Wyoming refining business sells refined products through our logistics network to wholesale, bulk, and retail customers primarily in the Rapid City, South Dakota, area.

Total yield 97.6 % 97.4 % 97.7 %

Our Wyoming refining business transports refined products through our logistics network to wholesale, bulk, and retail customers primarily in Wyoming and South Dakota.

Products are also distributed by rail from our refinery to markets beyond our logistics network.

We believe our Wyoming refining operations are best captured by the Wyoming 3-2-1 Index, or three barrels of WTI converted into two barrels of gasoline and one barrel of distillates (jet fuel and diesel).

We believe the Wyoming 3-2-1 crack spread, a 50%/50% blend of Rapid City 3-2-1 and Denver 3-2-1 (WTI based) crack spreads, best reflects a market indicator for our

Wyoming refining and fuel distribution operations.

The Wyoming 3-2-1 Index averaged $24.90 per barrel during 2019 with a low of $15.09 per barrel average in the first quarter and a high of $28.89 per barrel average in the second quarter.

We believe the Wyoming 3-2-1 crack spread, a 50%/50% blend of Rapid City 3-2-1 and Denver 3-2-1 (WTI based) crack spreads, best reflects a market indicator for our Wyoming refining and fuel distribution operations.

The Wyoming 3-2-1 Index, or three barrels of WTI converted into two barrels of gasoline and one barrel of distillates (jet fuel and diesel), averaged

$17.80 per barrel during 2020 with a low of $15.86 per barrel average in the first quarter and a high of $20.24 per barrel average in the third quarter.

Below is a summary of average crack spreads for the years ended December 31, 2020, 2019, and 2018:

Year Ended December 31,

2020 2019 2018

Wyoming 3-2-1 Index

$ 17.80 $ 24.90 $ 22.69

All facets of the energy industry are highly competitive.

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— Management’s Discussion and Analysis of Financial Condition and Results of Operations — Commitments and Contingencies — Supply and Offtake Agreements” of this Form 10-K for further information.

Our Wyoming refinery sources its crude oil and feedstocks primarily from the PADD IV region of the United States.

Our Washington refinery utilizes an intermediation arrangement with MLC and sources its crude oil and feedstocks primarily from North Dakota and Canada.

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— Management’s Discussion and Analysis of Financial Condition and Results of Operations — Commitments and Contingencies — Washington Refinery Intermediation Agreement” of this Annual Report on Form 10-K for further information.

Our Wyoming refinery sources its crude oil and feedstocks primarily from the Petroleum Administration for Defense District IV Rocky Mountain (“PADD IV”) region of the United States.

Our Hawaii refineries’ product slate is tailored to meet local on-island demand.

Outside the Hawaii market, our refined product sales from our Hawaii refineries typically target the Eastern Asia and U.S.

West Coast markets.

Our Wyoming refinery primarily sells refined products locally in the PADD IV region.

Outside the Hawaii market, our refined product sales from our Hawaii refineries typically target the U.S.

West Coast market.

Our Washington refinery primarily sells refined products in the Pacific Northwest region.

Our Wyoming refinery primarily sells refined products locally in the PADD IV region.

The retail segment includes 90 locations in Hawaii and 33 locations in Washington and Idaho where we set the price to the retail consumer.

Of these, 34 of the Hawaii locations and all 33 Washington and Idaho locations are outlets operated by our personnel and include various sizes of kiosks, snack shops, or convenience stores.

The remaining 57 Hawaii locations are cardlock s or sites operated by third parties where we retain ownership of the fuel and set retail pricing.

We hold exclusive licenses within the state of Hawaii to utilize the “76” brand for retail locations.

Since 2016, we have completed the rebranding of 40 out of our 91 fueling stations in Hawaii to Hele, a new proprietary brand.

All of the manned Hawaii locations and one cardlock are currently operated under one of those brands (see table below).

Of these, 34 of the Hawaii locations and all 33 Washington and Idaho locations are operated by our personnel and include various sizes of kiosks, snack shops, or convenience stores.

The remaining 56 Hawaii locations are cardlocks or sites operated by third parties where we retain ownership of the fuel and set retail pricing.

We hold exclusive licenses within the state of Hawaii to utilize the “76” brand for retail locations, with 40 of our retail sites branded “76”.

The “76” license agreement expires September 24, 2024, unless extended by mutual agreement.

Through December 31, 2019 , we completed the rebranding of 28 of our 34 company-operated convenience stores in Hawaii to “nomnom,” a new proprietary brand.

Our retail outlets in Washington and Idaho operate under the “ Cenex® ” and “ Zip Trip® ” brand names.

An additional 42 of our sites operate under our proprietary Hele fuel brand.

Since its launch in 2016, the Hele brand has won several awards for being the preferred fuel choice for Hawaii customers.

Our eight cardlock locations on Kauai are branded Kauai Automated Fuels (“KAF”).

Through December 31, 2020, we completed the rebranding of all of our 34 company-operated convenience stores in Hawaii to “nomnom,” a new proprietary brand.

As of December 31, 2020, most of our retail outlets in Washington and Idaho continued to operate under the “Cenex®” and “Zip Trip®” brand names.

A rebranding of those sites to our proprietary “nomnom” brand began in December 2020 and the rebranding of four sites was completed as of December 31, 2020.

As part of the Northwest Retail Acquisition, Par and CHS, Inc.

entered into a multi-year branded petroleum marketing agreement for the continued supply of Cenex®-branded refined products to the 33 acquired Cenex® Zip Trip convenience stores.

The following table shows our owned and leased retail outlets by location and type:

Location and Channel of Trade

Cenex ® Zip Trip Brand

As these stores are rebranded, Par will begin self-supplying the fuel with equity barrels and/or unbranded fuels procured in the open market.

The following table shows our owned and leased retail outlets by location and type as of December 31, 2020:

Location and Channel of Trade “76” Brand Hele Brand KAF Cenex® Zip Trip Brand

Company operated 2 18 — — — 20

7-Eleven alliance 22 8 — — — 30

Fee operated 5 2 — — — 7

Cardlock — 4 — — — 4

Oahu total 29 32 — — — 61

Company operated 3 6 — — — 9

Fee operated 3 — — — — 3

Big Island total 6 6 — — — 12

Company operated 1 4 — — — 5

Fee operated 1 — — — — 1

Maui total 2 4 — — — 6

Fee operated 3 — — — — 3

Cardlock — — 8 — — 8

Kauai total 3 — 8 — — 11

Total for Hawaii locations 40 42 8 — — 90

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Company operated — — — 8 — 8

Total for Washington and Idaho locations

Idaho total — — — 8 — 8

Total for Pacific Northwest locations — — — 29 4 33

Total for retail segment 40 42 8 29 4 123

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Our Hawaii competitors include the Shell, Texaco, Costco, Safeway, and Sam’s Club national brands, regional brand Aloha, and other local retailers.

Competitors of our Northwest Retail assets include the Chevron, Exxon, Conoco, Safeway, and Costco national brands, regional brands such as Maverik, Holiday, and Fred Meyer, and other local retailers.

Our logistics segment generates revenues by charging fees for transporting crude oil to our refineries, delivering refined products to wholesale and bulk customers and to our retail business, and storing crude oil and refined products.

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Connecting the SPM to the Hawaii refineries are three undersea pipelines:

a 30-inch line for crude oil, a 20-inch line, and a 16-inch line, both for the import or export of refined

a 30-inch line for crude oil, a 20-inch line, and a 16-inch line, both for the import or export of refined products.

From the Hawaii refineries’ gates, we distribute refined products through our logistics network throughout the islands of Oahu, Maui, Hawaii, Molokai, and Kauai and for export to the U.S.

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The Oahu logistics network includes a 27-mile wholly owned and operated pipeline network that transports refined products from our Hawaii refineries to delivery locations.

The majority of our Oahu refined product volumes are distributed through a multi-product pipeline (the “Honolulu Products Pipeline”) to (i) our leased and operated Sand Island terminal, (ii) the Honolulu International Airport, (iii) interconnections to Navy and Air Force fuel facilities, and (iv) a third-party terminal in Honolulu Harbor.

In addition to the Honolulu Products Pipeline, we own four proprietary pipelines connecting our Hawaii refineries to Kalaeloa Barbers Point Harbor, approximately three miles from the Par East refinery.

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The Oahu pipeline network is generally configured to be bidirectional, allowing for both delivery and receipt of products.

In connection with the Par West Acquisition , we entered into a long-term agreement with IES for storage and throughput at the Par West refinery.

In connection with the Par West Acquisition, we entered into a long-term agreement with IES for storage and throughput at the Par West Hawaii refinery.

The agreement provides for the right to utilize 2 MMbbls of dedicated crude oil and refined product storage, as well as certain IES logistics assets, including its off-shore mooring and Honolulu pipeline system.

During the first half of 2019, crude oil was transferred to the Par West refinery via the IES off-shore mooring and a 30-inch undersea pipeline.

During the first half of 2019, crude oil was transferred to the Par West Hawaii refinery via the IES off-shore mooring and a 30-inch undersea pipeline.

During the third quarter of 2019, we completed an on-shore pipeline manifold that connects the IES pipeline to our owned SPM pipeline (the “Tie-In”).

The Tie-In allows crude oil to be transferred from our SPM to the Par East and Par West refineries.

The Tie-In provides operational flexibility and redundancy in the event of maintenance on the off-shore pipelines, subject to availability of the IES off-shore mooring.

Our terminal facilities on Oahu include our Sand Island facility that comprises two tanks with a total capacity of 30 Mbbls, as well as contractual rights to utilize strategically located third-party facilities both near the Hawaii refineries and at Honolulu Harbor near downtown.

The Tie-In allows crude oil to be transferred from our SPM to the Par East and Par West Hawaii refineries.

We also operate a proprietary trucking business on Oahu to distribute gasoline and road diesel to the final point of sale.

Our logistics network for the islands neighboring Oahu consists of leased barge equipment and refined product tankage and proprietary trucking operations on the islands of Maui, Hawaii, Molokai, and Kauai.

We charter several barges to serve our neighbor island markets.

We lease three barges in order to serve our product distribution requirements to neighbor islands and bunker demand within the state.

Our logistics network for the islands neighboring Oahu consists of leased barge equipment, refined product tankage, and proprietary trucking operations on the islands of Maui, Hawaii, Molokai, and Kauai.

We charter a barge and have service agreements with third parties to serve our neighbor island markets.

The barges deliver to, and product is dispensed from, a neighbor island network of seven petroleum terminals with total storage capacity of 301 Mbbls.

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Washington Logistics

Our Washington logistics network includes 2.9 MMbbls of storage capacity, a proprietary 14-mile jet fuel pipeline that serves McChord Air Force Base, a marine terminal with 15 acres of waterfront property, a unit train-capable rail loading terminal with 107 unloading spots, and a truck rack with six truck lanes and 10 loading arms.

These assets provide connectivity to Bakken, Canadian, and Alaskan crude oil and the Pacific, West Coast, Pacific Northwest, and Rockies product markets.

Our Washington logistics network includes 2.8 MMbbls of storage capacity, a proprietary 14-mile jet fuel pipeline that serves Joint Base Lewis McChord, a marine terminal with 15 acres of waterfront property, a unit train-capable rail loading terminal with 107 unloading spots, a manifest rail siding with 32 spots including an Asphalt, Butane, and Biodiesel loading and unloading facilities, and a truck rack with six truck lanes and 10 loading arms.

These assets provide connectivity to Bakken, Canadian, and Alaskan crude oil, renewable fuels, and the Pacific, West Coast, Pacific Northwest, and Rockies product markets.

Wyoming Logistics

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Hawaii Market

The Hawaii State Department of Business, Economic Development, and Tourism (“DBEDT”) projected Hawaii’s economic growth at 1.2% for 2019, continuing the trend of positive but slower growth.

Hawaii’s economic growth rate for 2020 is expected to match 2019 at 1.2%.

While the pace of growth has slowed in recent years, the labor market has remained strong, consumer confidence is elevated, wage growth has remained solid, and consumer spending has continued to grow.

With tourism as the principal engine behind Hawaii’s economy, the state continued to register record visitor arrivals in 2019.

Through December 2019, visitor arrivals were up 5.4% over 2018 at 10.4 million, continuing an eight year trend of growth.

The corresponding nominal visitor expenditures increased 1.4% compared to 2018, with healthy gains from the continental U.S.

and Japan, offset by declines from other international markets.

Total number of air seats on scheduled flights to Hawaii, a leading indicator of the tourism industry, increased 2.9% during 2019.

According to U.S.

domestic carriers flying to Hawaii, scheduled air seats to Hawaii during the heavy winter travel season are projected to increase 10.4% in January 2020, 15.6% in February 2020, and 8.1% in March 2020 as compared to the prior year.

Demand for jet fuel is somewhat higher in Hawaii during the winter months than during the summer months as tourism increases during the winter months.

Refining margins remain volatile and our results of operations may not reflect these historical seasonal trends.

The COVID-19 pandemic had a significant impact on Hawaii’s communities and economy in 2020 and state economists are predicting a slow but steady multi-year road to recovery.

Beginning with a mandatory 14-day quarantine period for arriving visitors in March 2020, visitor arrivals plummeted by more than 90% from the previous year.

Restrictions on travel, business closures, and strict limits on in-person gatherings severely curtailed demand for jet and other fuels and stymied the economy.

After beginning 2020 at 2.6% unemployment, the average unemployment rate in Hawaii increased to an average of 15.1% from April through December 2020, when Hawaii lost 110,600 non-agricultural payroll jobs compared with the same period a year earlier, according to the Hawaii Department of Business, Economic Development and Tourism (“DBEDT”), and every sector lost jobs except for the construction industry and federal government.

The unemployment rate has since decreased to 10.3% in December 2020, according to the U.S.

Bureau of Labor Statistics.

According to the University of Hawaii Economic Research Organization’s (“UHERO”) December 2020 report, the start of mass vaccinations in Hawaii will improve growth prospects for the second half of 2021.

In the fall of 2020, the State of Hawaii instituted the Safe Travels program, requiring all transpacific travelers to secure a negative COVID-19 test prior to arriving on the islands, allowing the visitor industry to welcome travelers back beginning in mid-October 2020.

Visitor arrivals in November 2020, the first full month of the Safe Travelers program, increased to less than one quarter of their level in November 2019 and employment in the leisure and hospitality industry is about half of its pre-pandemic level, according to UHERO.

Economists and lawmakers remain optimistic that an increased rollout of vaccinations, a proliferation of testing for residents and transpacific arrivals, and stimulus measures enacted by state and federal lawmakers will put Hawaii on a course to recovery, with gradual gains becoming visible as tourist activity resumes.

Pacific Northwest and Rockies Markets

Spokane, Washington, and Northwest Idaho are the primary regions of our Pacific Northwest retail operations and the U.S.

Census Bureau projected that the population increased 1.2% in Washington and 2.1% in Idaho from 2018 to 2019.

Spokane, Washington, and Northwest Idaho are the primary regions of our Pacific Northwest retail operations and are enjoying significantly higher population growth rates than the country as a whole.

Census Bureau projected that the population increased 13.2% in Washington and 14.0% in Idaho from 2010 to 2019 versus a national increase of only 6.3%.

Spokane is a regional hub in eastern Washington, with a population of over a half million and a variety of employers in the health care, retail, and other industries.

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Bureau of Economic Analysis (the “BEA”), personal income for the Spokane metro area grew by 8.9% between 2017 and 2019, continuing the trend of positive growth since the 2008-2009 recession.

Additionally, Amazon is constructing a new fulfillment center near the Spokane International Airport that is anticipated to open in 2020, and future regional growth and increased traffic is expected.

A significant portion of our Washington refinery’s refined products stay within the Puget Sound region.

Washington is one of the fastest growing states in the union and most of this growth is occurring in the Puget Sound area due to large information industry companies like Microsoft, Amazon, and Expedia.

According to the BEA, gross domestic product (“GDP”) for Washington grew by 3.1% from 2018 to 2019, leading the Far West states and ranking third nationally.

Additionally, Amazon.com, Inc.

opened a new fulfillment center near the Spokane International Airport in June 2020 and future regional growth and increased traffic is expected.

A significant portion of the products produced by our Washington refinery stay within the Puget Sound region.

According to the BEA, gross domestic product (“GDP”) for Washington state grew by 3.1% from 2018 to 2019, leading the Far West states and ranking third nationally.

According to the BEA, personal income in Puget Sound’s four largest counties grew on average 6.3% between 2017 and 2018 and personal income in the State of Washington grew an average 6.4% and ranked second nationally for the first three quarters of 2019.

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According to the U.S.

Census Bureau, the population in Pennington County, the state’s second largest county, increased by 1.37% from 2017 to 2018.

Census Bureau, the population in Pennington County, the state’s second largest county, increased by 12.7% from 2010 to 2019 compared to 6.3% nationally over the same period.

According to the BEA, personal income in South Dakota grew by 3.2% from 2018 to 2019.

Unemployment in South Dakota continues to remain below the national average unemployment rate at 3.2%.

Unemployment in South Dakota continues to remain below the national average unemployment rate at 3.3% for December 2020, according to the U.S.

Bureau of Labor Statistics.

Demand for gasoline is highly seasonal, with a large increase in demand during the summer driving season.

The South Dakota economy is anchored by tourism, including visitors to Mount Rushmore and the Black Hills, as well as government and health care spending.

The South Dakota tourism industry marked its 10th consecutive growth year.

Visitor spending in South Dakota was approximately $4.1 billion in 2019, an increase of 2.8% over 2018, and there were approximately 14.5 million visitors, a 3.1% increase as compared to 2018.

In 2019, $941 million, or 23%, of tourism dollars were spent on transportation services.

According to the South Dakota Department of Tourism, despite limitations to mobility and economic disruption caused by the COVID-19 pandemic, South Dakota welcomed 12.6 million visitors, a 12.9% decrease as compared to 2019, resulting in visitor spending of approximately $3.4 billion in 2020, a decrease of 17.9% over 2019.

In 2020, $644 million,

or 19%, of tourism dollars were spent on transportation services, a decrease of 32% from 2019, when $941 million, or 23%, of tourism dollars were spent on transportation services.

We also distribute refined products to customers in central and northeastern Wyoming.

The economy in Wyoming is sensitive to demand for Powder River Basin coal and other locally-produced commodities.

Coal mine production in the Powder River Basin decreased in 2019 and coal prices were slightly lower in 2019;

however, the U.S.

Energy Information Administration forecasts that coal prices will increase in both 2020 and 2021.

Energy Information Administration forecasts that coal production will increase in both 2021 and 2022.

OTHER OPERATIONS

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As of December 31, 2020, we own a 46.0% equity investment in Laramie Energy, a joint venture entity focused on producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado.

On February 28, 2018 , Laramie Energy closed a purchase and contribution agreement with an unaffiliated third party that contributed all of its oil and gas properties located in the Piceance Basin to Laramie Energy, consisting of approximately 24 billion cubic feet equivalent of proved developed producing reserves.

The acquired and existing properties produce primarily from the Mesaverde formation and, to a lesser extent, the Mancos formation.

The majority of the acquired acreage is adjacent to Laramie Energy’s existing assets.

As of December 31, 2019 , the estimated proved reserves we own indirectly through Laramie Energy are as follows:

Company’s share of Laramie Energy

Proved developed

Proved undeveloped

For more information regarding our proved undeveloped reserves, please read “ Item 2.

— Properties — Reserves — Proved Undeveloped Reserves” of this Form 10-K.

The following table presents the estimated future net cash flows related to proved developed producing, proved developed non-producing, and proved undeveloped reserves that we own indirectly through Laramie Energy as of December 31, 2019 (in thousands):

Non-producing

Estimated future undiscounted net cash flows

Standardized measure of discounted future net cash flows

________________________________________________

Prices are based on the historical first-day-of-the-month twelve-month average spot price depending on the area.

These prices are adjusted for quality, energy content, regional price differentials, and transportation fees.

All prices are held constant throughout the lives of the properties.

The average adjusted prices are $51.83 per barrel of crude oil, $16.98 per barrel of natural gas liquids, and $2.22 per Mcf of natural gas.

Reconciliation of Standardized Measure to PV-10

PV-10 is the estimated present value of the future net revenues calculated based on our estimated proved reserves before income taxes discounted using a 10% discount rate.

PV-10 is considered a non-GAAP financial measure under SEC regulations because it does not include the effects of future income taxes, as is required in computing the standardized measure of discounted future net cash flows.

This measure should not be considered a substitute for, or superior to, measures prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”) .

We believe that PV-10 is an important measure that can be used to evaluate the relative significance of Laramie Energy's natural gas and oil properties to other companies and that PV-10 is widely used by securities analysts and investors when evaluating oil and gas companies.

Because many factors that are unique to each individual company impact the amount of future income taxes to be paid, the use of a pre-tax measure provides greater comparability of assets when evaluating companies.

PV-10 is computed on the same basis as the standardized measure of discounted future net cash flows but without deducting income taxes.

The following table provides a reconciliation of our share of Laramie Energy’s standardized measure of discounted future net cash flows to PV-10 at December 31, 2019 (in thousands):

Standardized measure of discounted future net cash flows

Present value of future income taxes discounted at 10% (1)

________________________________________________

There is no present value of future income taxes as we believe we have sufficient net operating loss carryforwards to offset any income.

Please read Note 20—Income Taxes to our consolidated financial statements under Item 8 of this Form 10-K for further information.

For more information on Laramie Energy ’s natural gas and oil operations, please read “ Item 2.

— Properties ” of this Form 10-K.

The natural gas and oil business is highly competitive.

The principal markets for natural gas and oil are refineries and transmission companies that have facilities near Laramie Energy’s producing properties.

Natural gas and oil produced from Laramie Energy’s wells are normally sold to various purchasers.

Natural gas wells are connected to pipelines generally owned by the natural gas purchasers.

A variety of pipeline transportation charges are usually included in the calculation of the price paid for the natural gas.

Crude oil is picked up and transported by the purchaser from the wellhead.

In some instances, Laramie Energy is charged a fee for the cost of transporting the crude oil, which is deducted from or accounted for in the price paid for the crude oil.

We have discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment has been reduced to zero.

Our equity investment in Laramie Energy and the reserves we own indirectly through Laramie Energy are not material to our consolidated financial statements as of December 31, 2020.

Laramie Energy’s oil and gas producing activities are not material to our business operations or financial position.

BANKRUPTCY AND PLAN OF REORGANIZATION

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Such estimates may be subject to revision in the future as regulations and other conditions change.

Laramie Energy’s Natural gas and oil production

Laramie Energy’s activities with respect to exploration and production of natural gas and oil, including the drilling of wells and the operation and construction of pipelines, plants, and other facilities for extracting, transporting, processing, treating, or storing natural gas, crude oil, and other petroleum products, are subject to stringent environmental regulation by state and federal authorities, including the U.S.

Environmental Protection Agency (“EPA”).

Such regulation can increase the costs of planning, designing, installing, and operating such facilities.

Although we believe that compliance with environmental regulations will not have a material adverse effect on us, risks of substantial costs and liabilities are inherent in natural gas and oil production, transport, and storage operations and there can be no assurance that significant costs and liabilities will not be incurred.

Moreover, it is possible that other developments, such as spills or other unanticipated releases, stricter environmental laws and regulations, and claims for damages to property or persons resulting from oil and gas production, transport, or storage would result in substantial costs and liabilities to us.

Climate Change and Regulation of Greenhouse Gases

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In response to the scientific studies, legislative and regulatory initiatives have been underway to limit GHG emissions.

Supreme Court determined that GHG emissions fall within the federal Clean Air Act (“CAA”) definition of an “air pollutant.” In response, the EPA promulgated an endangerment finding, paving the way for regulation of GHG emissions under the CAA.

Supreme Court determined that GHG emissions fall within the federal Clean Air Act (“CAA”) definition of an “air pollutant.” In response, the U.S.

Environmental Protection Agency (“EPA”) promulgated an endangerment finding, paving the way for regulation of GHG emissions under the CAA.

The EPA has now begun regulating GHG under the CAA.

New construction or material expansions that meet certain GHG emissions thresholds will likely require that, among other things, a GHG permit be issued in accordance with the federal CAA regulations, and we will be required, in connection with such permitting, to undertake a technology review to determine appropriate controls to be implemented with the project in order to reduce GHG emissions.

Based on current company operations, however, Laramie Energy’s natural gas and oil exploration and production activities and our existing refining activities are not subject to current federal GHG permitting requirements.

Based on current company operations, however, our existing refining activities are not subject to current federal GHG permitting requirements.

The EPA has also promulgated rules requiring large sources to report their GHG emissions.

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Hawaii’s regulation allows for “partnering” with other facilities (principally power plants) that have already dramatically reduced GHG emissions or are on schedule to reduce CO 2 emissions in order to comply with the state’s Renewable Portfolio Standards.

The DOH’s GHG regulation allows, and the Hawaii refineries submitted, a GHG reduction plan, which establishes a combined GHG limit between the Par East and Par West refineries and includes an assessment of alternatives which demonstrates that additional reductions are not cost-effective or necessary because the State of Hawaii has already reached the 1990 levels according to a report prepared by the DOH in January 2019.

Accordingly, our Hawaii refineries submitted a GHG reduction plan that incorporates the partnering provisions and demonstrates that additional reductions are not cost-effective or necessary because of the Hawaii refineries’ shared baseline allocation and because the State of Hawaii has already reached the 1990 levels according to a report prepared by the DOH in January 2019.

Further regulatory, legislative, and judicial developments are likely to occur in the future.

The new Administration’s Executive Orders signaling a return to the Paris Climate Accord and voiding the prior Administration’s orders on the social cost of carbon suggest the imminence of such changes.

Such developments may affect how these GHG initiatives will impact us.

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On Oahu, the state’s largest utility frequently cites compliance with NAAQS as one of its justifications for moving towards a cleaner bridge fuel, potentially diesel or liquefied natural gas, before reaching its renewable goals.

On October 1, 2015, the EPA adopted rules that would substantially tighten the NAAQS for ground-level ozone.

This rule will cause many areas of the country to require additional controls and limits on combustion emissions and emissions of volatile organic compounds.

On October 1, 2015, the EPA adopted rules, which were reaffirmed in December 2020, that substantially tightened the NAAQS for ground-level ozone.

These rules are causing many areas of the country to develop requirements for additional controls and limits on combustion emissions and emissions of volatile organic compounds.

We do not currently anticipate that the more stringent NAAQS will materially impact our Hawaii, Washington, or Wyoming operations.

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by model year 2020 and contained an expanded Renewable Fuel Standard (the “RFS”).

In August 2012, the EPA and National Highway Traffic Safety Administration (“NHTSA”) jointly adopted regulations that establish an average industry fuel economy of 54.5 miles per gallon by model year 2025.

In August 2012, the EPA and National Highway Traffic Safety Administration (“NHTSA”) jointly adopted regulations that establish vehicle carbon dioxide emissions standards and an average industry fuel economy of 54.5 miles per gallon by model year 2025.

On August 8, 2018, the EPA and NHTSA jointly proposed to revise existing fuel economy standards for model years 2021-2025 and to set standards for 2026 for the first time.

The agencies have not yet issued a final rule revising the fuel economy standards.

Although the revised fuel economy standards are expected to be less stringent than the initial standards for model years 2021-2025, it is uncertain whether the revised standards will increase year over year.

On March 31, 2020, the agencies released updated fuel economy and vehicle emissions standards, which provide for an increase in stringency by 1.5% each year through model year 2026, as compared with the standards issued in 2012 that required 5% annual increases.

Higher fuel economy standards have the potential to reduce demand for our refined transportation fuel products.

Under EISA, the RFS requires an increasing amount of renewable fuel to be blended into the nation’s transportation fuel supply, up to 36 billion gallons by 2022.

Over time, higher annual RFS requirements have the potential to reduce demand for our refined transportation fuel products.

In the near term, the RFS will be satisfied primarily with fuel ethanol blended into gasoline.

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To the extent that we exceed the minimum volumetric requirements for blending of renewable fuels, we can retain these RINs for current or future RFS compliance or sell those on the open market.

EPA has not yet set volumetric requirements for 2021, which makes it difficult to estimate our obligations.

The RFS may present production and logistics challenges for both the renewable fuels and petroleum refining and marketing industries in that we may have to enter into arrangements to purchase RINs with other parties or purchase cellulosic biofuels RINs (“D3”) waivers from the EPA to meet our obligations to use advanced biofuels, including biomass-based diesel and cellulosic biofuel, with potentially uncertain supplies of these new fuels.

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however, increased renewable fuel in the nation’s transportation fuel supply could reduce demand for our refined products.

In March 2014, the EPA published a final Tier 3 gasoline standard that requires, among other things, that gasoline contain no more than 10 parts per million (“ppm”) sulfur on an annual average basis and no more than 80 ppm sulfur on a per-gallon basis.

gallon basis.

The standard also lowers the allowable benzene, aromatics, and olefins content of gasoline.

The effective date for the new standard was January 1, 2017, however, approved small volume refineries had until January 1, 2020 to meet the standard.

The Par East refinery was required to comply with Tier 3 gasoline standards within 30 months of June 21, 2016, the date it was disqualified from small volume refinery status.

The Par East Hawaii refinery was required to comply with Tier 3 gasoline standards within 30 months of June 21, 2016, the date it was disqualified from small volume refinery status.

On March 19, 2015, the EPA confirmed the small refinery status of our Wyoming refinery.

The Par East refinery, our Wyoming refinery, and our Washington refinery, acquired in January 2019, were all granted extensions of small refinery exemptions by the EPA for 2018.

The Par East Hawaii refinery, our Wyoming refinery, and our Washington refinery, acquired in January 2019, were all granted extensions of small refinery exemptions by the EPA for 2018.

All our refineries are Tier 3 compliant.

Beginning on June 30, 2014, new sulfur standards for fuel oil used by marine vessels operating within 200 miles of the U.S.

coastline (which includes the entire Hawaiian Island chain) was lowered from 10,000 ppm (1%) to 1,000 ppm (0.1%).

The sulfur standards began at the Hawaii refineries and were phased in so that by January 1, 2015, they were fully aligned with the International Marine Organization (“IMO”) standards and deadline.

coastline (which includes the entire Hawaiian Island chain) were lowered from 10,000 ppm (1%) to 1,000 ppm (0.1%).

The sulfur standards began at the Hawaii refineries and were phased in so that by January 1, 2015, they were fully aligned with the IMO standards and deadline.

The more stringent standards apply universally to both U.S.

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Although our Hawaii refineries remain in a position to supply vessels traveling to and through Hawaii, the market for 0.1% sulfur distillate fuel and 3.5% sulfur residual fuel is much more competitive.

In addition to U.S.

fuels requirements, the IMO has adopted newer standards that further reduce the global limit on sulfur content in maritime fuels to 0.5% beginning in 2020 (“IMO 2020”).

In addition to federal requirements, several states, including Washington, have proposed or enacted low carbon fuel standards applicable to transportation fuels.

The Washington proposal would create a carbon intensity score for transportation fuels, and require fuel producers and importers who fall short of carbon intensity goals to purchase credits.

Additionally, the IMO has adopted standards to further reduce the global limit on sulfur content in maritime fuels to 0.5% beginning in 2020 (“IMO 2020”).

Like the rest of the refining industry, we have been focused on meeting these standards, which may impact our results of operations.

There will be compliance costs and uncertainties regarding how we will comply with the various requirements contained in the EISA, RFS, IMO 2020, and other fuel-related regulations.

There will be compliance costs and uncertainties regarding how we will comply with the various requirements contained in the EISA, RFS, and other fuel-related regulations.

We may experience a decrease in demand for refined petroleum products due to an increase in combined fleet mileage or due to refined petroleum products being replaced by renewable fuels.

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The EPA has limited the disposal options for certain hazardous wastes and state regulation of the handling and disposal of refining and natural gas and oil exploration and production wastes and solid wastes is becoming more stringent.

Furthermore, it is possible that certain wastes generated by Laramie Energy’s natural gas and oil operations which are currently exempt from regulation as “hazardous wastes” may in the future be designated as “hazardous wastes” under RCRA or other applicable statutes and therefore be subject to more rigorous and costly disposal requirements.

Naturally Occurring Radioactive Materials (“NORM”) are radioactive materials that accumulate on production equipment or area soils during oil and natural gas extraction or processing.

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We believe that our operations are in material compliance with all applicable NORM standards.

Our natural gas and oil properties have been operated by third parties that controlled the treatment of hydrocarbons or other solid wastes and the manner in which such substances may have been disposed or released.

State and federal laws applicable to refineries and to natural gas and oil wastes and properties have gradually become stricter over time.

Under these laws, we could be required to remove or remediate previously disposed wastes (including wastes disposed or released by prior owners or operators) or property contamination (including groundwater contamination by prior owners or operators) or to perform remedial operations to prevent future contamination.

The Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), also known as the “Superfund” law, imposes liability, without regard to fault or the legality of the original conduct, on certain persons with respect to the release or threatened release of a “hazardous substance” into the environment.

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State statutes impose similar liability.

Under CERCLA, the term “hazardous substance” does not include “petroleum, including crude oil or any fraction thereof,” unless specifically listed or designated and the term does not include natural gas, NGLs, liquefied natural gas, or synthetic gas usable for fuel.

While this “petroleum exclusion” lessens the significance of CERCLA to Laramie Energy ’s exploration and production operations, we may generate wastes that may fall within CERCLA’s definition of a “hazardous substance” in the course of our ordinary refining and natural gas and oil operations.

Although we and, to our knowledge, our predecessors have used

operating and disposal practices that were standard in the industry at the time, “hazardous substances” may have been disposed or released on, under, or from the properties currently or historically owned or leased by us or on, under, or from other locations where these wastes have been taken for disposal.

Under CERCLA, the term “hazardous substance” does not include “petroleum, including crude oil or any fraction thereof,” unless specifically listed or designated.

While this “petroleum exclusion” lessens the significance of our operations, we may generate wastes that may fall within CERCLA’s definition of a “hazardous substance” in the course of our ordinary refining operations.

Although we and, to our knowledge, our predecessors have used operating and disposal practices that were standard in the industry at the time, “hazardous substances” may have been disposed or released on, under, or from the properties currently or historically owned or leased by us or on, under, or from other locations where these wastes have been taken for disposal.

At this time, we do not believe that we have any liability associated with any Superfund site and we have not been notified of any claim, liability, or damages under CERCLA.

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For example, the Colorado Oil and Gas Conservation Commission (“COGCC”) approved rules that require sampling of groundwater for hydrocarbons and other indicator compounds both before and after drilling.

Hydraulic Fracturing

Laramie Energy’s exploration and production activities may involve the use of hydraulic fracturing techniques to stimulate wells and maximize natural gas production.

Some states and localities now regulate the utilization of hydraulic fracturing and other states and localities are in the process of developing, or are considering development of, such rules.

A state ballot initiative was introduced in Colorado in 2018 that would have required oil and gas wells to be at least 2,500 feet from homes and other occupied buildings.

This initiative was rejected, but similar legislative action could subject Laramie Energy’s drilling activities to new or enhanced federal, state, and/or local regulatory requirements, including requirements that could restrict the areas in which Laramie Energy is able to operate.

Air Emissions

Our refining operations and Laramie Energy’s exploration and production operations are subject to local, state, and federal regulations for the control of emissions from sources of air pollution.

Our refining operations are subject to local, state, and federal regulations for the control of emissions from sources of air pollution.

Administrative enforcement actions for failure to comply strictly with air regulations or permits may be resolved by payment of monetary fines and correction of any identified deficiencies.

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On September 25, 2013, Par Petroleum, LLC (formerly known as Hawaii Pacific Energy;

a wholly owned subsidiary of Par created for purposes of acquiring Par Hawaii Refining, LLC (“ PHR ”)), Tesoro, and PHR entered into an Environmental Agreement (“Environmental Agreement”) that allocated responsibility for known and contingent environmental liabilities related to the acquisition of PHR , including the Consent Decree as described below.

Consent Decree

On July 18, 2016, PHR and subsidiaries of Tesoro entered into a consent decree with the EPA, the U.S.

Department of Justice (“DOJ”), and other state governmental authorities concerning alleged violations of the federal CAA related to the ownership and operation of multiple facilities owned or formerly owned by Tesoro and its affiliates (“Consent Decree”), including the Par East refinery.

As a result of the Consent Decree, PHR expanded its previously-announced 2016 Par East refinery turnaround to undertake additional capital improvements to reduce emissions of air pollutants and to provide for certain NOx and SO 2 emission controls and monitoring required by the Consent Decree.

Tesoro is responsible under the Environmental Agreement for directly paying, or reimbursing PHR, for all reasonable third-party capital expenditures incurred pursuant to the Consent Decree to the extent related to acts or omissions prior to the closing date of the acquisition of PHR.

Tesoro is obligated to pay all applicable fines and penalties related to the Consent Decree.

Through December 31, 2019 , Tesoro has reimbursed us for $12.2 million of our total capital expenditures incurred in connection with the Consent Decree.

As of December 31, 2019 , all reimbursable capital expenditures incurred pursuant to the Consent Decree were collected.

Net capital expenditures and reimbursements related to the Consent Decree are presented within Capital expenditures on our consolidated statement of cash flows for the years ended December 31, 2019 , 2018 , and 2017 .

Please read Note 16—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Indemnification

In addition to its obligation to reimburse us for capital expenditures incurred pursuant to the Consent Decree, Tesoro agreed to indemnify us for claims and losses arising out of related breaches of Tesoro’s representations, warranties, and covenants in the Environment Agreement, certain defined “corrective actions” relating to pre-existing environmental conditions, third-party claims arising under environmental laws for personal injury or property damage arising out of, or relating to, releases of hazardous materials that occurred prior to the closing date of the PHR acquisition, any fine, penalty, or other cost assessed by a governmental authority in connection with violations of environmental laws by PHR prior to the closing date of the PHR acquisition, certain groundwater remediation work, fines, or penalties imposed on PHR by the Consent Decree related to acts or omissions of Tesoro prior to the closing date of the PHR acquisition, and claims and losses related to the Pearl City Superfund Site.

Tesoro’s indemnification obligations are subject to certain limitations as set forth in the Environmental Agreement.

These limitations include a deductible of $1 million and a cap of $15 million for certain of Tesoro’s indemnification obligations related to certain pre-existing conditions as well as certain restrictions regarding the time limits for submitting notice and supporting documentation for remediation actions.

a wholly owned subsidiary of Par created for purposes of acquiring Par Hawaii Refining, LLC (“PHR”)), Tesoro Corporation (“Tesoro,” which changed its name to Andeavor Corporation before being purchased by Marathon Petroleum Company in October 2018), and PHR entered into an Environmental Agreement (“Environmental Agreement”) that allocated responsibility for known and contingent environmental liabilities related to the acquisition of PHR, including a consent decree.

Other Government Regulation

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Congress and signed into law in July 2010, contains significant derivatives regulation, including requirements that certain transactions be cleared on exchanges and that collateral (commonly referred to as “margin”) be posted for such transactions.

The Dodd-Frank Act provides for a potential exception from these clearing and collateral requirements for commercial end users and

it includes a number of defined terms used in determining how this exception applies to particular derivative transactions and the parties to those transactions.

The Dodd-Frank Act provides for a potential exception from these clearing and collateral requirements for commercial end users and it includes a number of defined terms used in determining how this exception applies to particular derivative transactions and the parties to those transactions.

As required by the Dodd-Frank Act, the Commodities Futures and Trading Commission (“CFTC”) has promulgated numerous rules to define these terms.

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The majority of our refined products are primarily sold through short-term contracts or on the spot market.

For the year ended December 31, 2017, we had one customer in our refining segment that accounted for 10% of our consolidated revenues.

For the year ended December 31, 2020, we had one customer in our refining segment that accounted for 13% of our consolidated revenue.

No other customer accounted for more than 10% of our consolidated revenues during the years ended December 31, 2020, 2019, and 2018.

At December 31, 2019 , we employed 1,408 people, 260 of whom are covered by collective bargaining agreements.

At our Par East and Washington refineries, 224 employees are represented by the United Steelworkers Union (“USW”) with collective bargaining agreements expiring on January 31, 2022 .

At our Par West refinery, 36 employees are represented by the International Brotherhood of Electrical Workers (“IBEW”) with a collective bargaining agreement expiring on December 31, 2020 ;

we plan to engage in negotiations for a new extension of the collective bargaining agreement.

We consider our relations with our represented and non-represented employees to be satisfactory.

HUMAN CAPITAL

Workforce Composition

At Par, we believe our employees are our most valuable asset.

By investing in our employees, we are able to achieve success and continue to execute on our mission and vision.

At December 31, 2020, our workforce consisted of 1,403 employees, including 243 employees, or 17% of our total workforce, at our Hawaii and Washington refineries represented by the United Steelworkers Union (“USW”) with collective bargaining agreements expiring on January 31, 2022.

We value all our employees, represented and non-represented, and constantly strive to maintain and improve satisfactory relationships with them.

Our 1,403 employees work in the following operating segments throughout the United States:

Operating Segment

Number of Employees

Refining and Logistics

Par is focused on recruiting and developing a diverse workforce.

We prioritize outreach activities that increase the diversity of applicants for open positions and actively ensure that all open positions are posted on job boards that target female, minority, disabled, and military veteran candidates.

We are developing relationships with local organizations that provide services to historically underserved populations and make them aware of career opportunities at Par.

As of December 31, 2020, our workforce consists of 50% minorities and 5% protected veterans.

Culture and Values

Par is a values-driven company.

Our tight-knit community values integrity, creativity, hard work, and respect for others.

These four pillars support our successes and strengthen our ability to be an effective and fun place to work.

We value innovative thought and rally behind ideas that create new opportunities.

We believe this drives our growth and success.

We value the unique heritage, experiences, and contributions of everyone we get to work with and serve.

Our commitment to doing the good and right thing with the highest ethical standards helps us to achieve our best results.

As we pursue growth and success, we believe it is important to keep our people safe, to value our diversity, and to protect our environment.

We offer highly competitive compensation, benefit, and time-off packages to promote employee fulfillment and work-life balance.

Our benefits include our employee stock purchase plan, generous time off allowance, and a tuition reimbursement program.

Health and Safety

Safety is paramount to every operation and activity we undertake.

We recognize that our responsible stewardship impacts every employee, every contractor, and every member of the community, and we embrace that responsibility.

We promote a culture of continual safety improvement with a keen eye for evaluating and managing risk.

We continually monitor the implementation of programs, policy, and procedures to achieve this objective.

The importance of quick action and continuous monitoring was made clear by the COVID-19 pandemic.

Our leaders took and continue to take swift action to protect employees, contractors, and customers and to ensure operations in each segment of our business are able to continue without interruption.

For example, our retail stores have installed plexiglass shields designed to limit employee exposure to viruses and our administrative offices have implemented alternative work schedules to reduce capacity and allow for social distancing.

Our actions demonstrate that we live our values every day.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-K may constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933 (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (“PSLRA”), or in releases made by the SEC, all as may be amended from time to time.

Certain statements in this Annual Report on Form 10-K may constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (“PSLRA”), or in releases made

by the SEC, all as may be amended from time to time.

Such forward-looking statements involve known and unknown risks, uncertainties, and other important factors that could cause our actual results, performance, or achievements to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements.

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These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors.

Although we believe such estimates and assumptions to be reasonable,

they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control.

Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control.

In addition, management’s assumptions about future events may prove to be inaccurate.

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— Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Annual Report on Form 10-K.

Additionally, significant uncertainties remain with respect to COVID-19 and its economic effects.

Due to the unpredictable and unprecedented nature of the COVID-19 pandemic, we cannot identify all potential risks to, and impacts on, our business, including the ultimate adverse economic impact to the Company’s business, results of operations, financial condition, and liquidity.

However, the adverse impact of COVID-19 on the Company has been and will likely continue to be material.

There can be no guarantee that the operational and financial measures the Company has taken, and may take in the future, will be fully effective.

All forward-looking statements speak only as of the date they are made.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business