BP Whiting expansion completion delayed until 2013
By GITTE LAASBY firstname.lastname@example.org February 4, 2011 5:26PM
Updated: September 24, 2012 6:25AM
WHITING — The expansion of the BP Whiting refinery won’t be complete until 2013 — about six months later than the company first planned. But once the modification is done, the refinery will be three times more profitable, a top BP official said.
That would make Whiting a cash cow for the company that was hit hard financially after the Gulf Coast spill from the Deep Water Horizon in April 2010.
“This is a very large and complex project, and it’s now about 60 percent complete with all major lifts of key units completed in 2010,” said Iain Conn, the chief executive of BP’s refining and marketing division, as the company presented its quarterly report Tuesday. “The project startup has now been deferred slightly, from late 2012 to mid-2013.”
Conn didn’t explain why completion would be delayed.
“I don’t think there is one specific reason,” said BP Whiting spokesman Brad Etlin. “It’s a big undertaking. We do our best to meet the planned schedule but there’s a number of pieces to this project and we’re just going to proceed with the project safely. We’re not going to rush the project. We’re going to do it well and we’re going to do it safely.”
The project includes construction of a new coker, a crude distillation unit, a gas oil hydrotreater, sulfur recovery facilities; modernization of the refinery’s wastewater treatment facilities and other environmental improvements.
The distillation unit will be online by 2012 as scheduled. Two components won’t be ready till 2013; the gas oil hydrotreater, which removes sulfur and nitrogen from gas oil, and the petroleum coker, which heats heavier residual products, such as asphalt, into lighter fuel products such as gasoline and diesel. Until those units are operational, the Whiting refinery will continue to run the range of crudes that it is running today, Etlin said.
The delay in Whiting means BP’s controversial wastewater permit from 2007 will expire before the expansion is complete. The permit allowed the company to increase its pollution to Lake Michigan and is only valid till July 31, 2012.
Rumors have circled that the Whiting project is over its $3.8 billion budget, but Etlin wouldn’t comment on that.
“I can’t confirm that. It’s a multibillion dollar project,” he said.
BP moving into alt fuels
In 2010, BP registered its first full-year loss since 1992 — $3.7 billion — mainly as a result of the Gulf Coast disaster. But expectations are high that the Whiting refinery will soon boost BP’s bottom line.
“Even at relatively low margins, this project is expected to deliver approximately a three-fold improvement in profitability and will contribute materially to improvement in our U.S. fuel value chain position overall,” Conn told investors Tuesday. “This comes from an increased ability to run heavy crudes, improved product yields and location advantage relative to the Gulf Coast for Canadian crude.”
BP is expanding to allow the Whiting refinery to process more Canadian crude oil, which is heavier on pollutants than conventional crude.
BP is changing its portfolio and plans to sell its refineries in Texas City and Carson near Los Angeles and concentrate its efforts to Whiting, Cherry Point, Wash., and its 50 percent stake in the Toledo, Ohio, refinery. Globally, that would make BP the smallest refiner of the traditional super majors, Conn said.
“Post-2013, we’ll have half the refining capacity of today, interests in three refineries with improved or transformed configurations, all of which have feedstock flexibility to run a range of crude oils, including heavy grades, and which are on average more diesel capable than BP’s current portfolio,” Conn said.
Meanwhile, BP’s wind farms are paying off, according to group chief executive Bob Dudley.
“We now have 10 operating wind farms of scale in the U.S. with a gross capacity of 1.3 gigawatts. This business is now cash positive and other wind farms will follow,” he told investors. “We believe as a leading energy company, we must invest in this future growth,”
The company has invested $5 billion since 2005 in renewable energy and plans to invest another $1 billion in 2011. BP projects renewable energy will be the most rapidly growing energy category.
The AP contributed. Contact Gitte Laasby at 648-2183.