HollyFrontier expects to finish upgrades in 2015Houston, 6 January (Argus) — US independent refiner HollyFrontier expects to finish more than $500mn in gasoline-focused upgrades at three refineries over the next year, the company said today.
Work at the refiner's 125,000 b/d complex in Tulsa, Oklahoma, and at the refiner's 31,000 b/d Woods Cross refinery in Utah, will be completed in the second half of the year, the company said in an investor presentation. An upgrade to fractionation at its 135,000 b/d refinery in El Dorado, Kansas, should finish this spring.
The projects increase gasoline yield and quality for HollyFrontier at a time when most US independent refiners have tilted upgrades toward distillate production, chasing attractive northeast and global margins. But HollyFrontier's Woods Cross refinery connects to the company's UNEV pipeline supplying Las Vegas, Nevada, giving the facility an outlet for gasoline. The gasoline-oriented upgrades are also aimed at better meeting stricter federal fuel regulations on the horizon.
The estimated $99mn naphtha fractionation project at El Dorado will allow the refinery to improve yield, extend the running time of units such as a reformer and reduce the benzene content of gasoline produced at the refinery. A naphtha splitter will separate light naphtha and isopentane from El Dorado's reformer and isomerization feeds to use as gasoline blendstock.
At Tulsa, the refiner will finish a $20mn series of upgrades this fall increasing a fluid catalytic cracking (FCC) unit's capacity by 4,000 b/d. The Tulsa complex, a combination of two former refineries, operates at less than 75pc of the facility's combined crude capacity.
HollyFrontier has filed a permit to run at the full combined 170,000 b/d rate, the latest step in at least three years of work to move past a paper constraint on higher capacity. State regulators capped the run rate at the time of HollyFrontier's purchase until sulfur reduction and other improvements were made. The company said in 2011 it expected to be able to eventually run at 155,000 b/d.
The company also expects to finish by the end of the year an up to $400mn project, including a 14,000 b/d expansion in crude capacity and flexibility at Woods Cross.
Refiners like HollyFrontier in the Salt Lake City area have found local Uinta black wax crudes a boon for their facilities. The high wax feedstocks are light and sweet but difficult to transport in large quantities beyond Utah. HollyFrontier signed a 10-year, 20,000 b/d supply agreement with independent producer Newfield in early 2012.
The refinery will add FCC and polymerization units shipped in from a shuttered refinery in Bloomfield, New Mexico. The upgrades will yield 60pc gasoline and 40pc diesel.
The company has considered another $1bn second phase expansion to bring the refinery to 60,000 b/d and produce group 3 base oil. Such an expansion would not be completed before 2018, according to the presentation.
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