(August 21, 2014 - Fuel Fix) Gulf Coast to benefit from refinery retrofits (By: Rhiannon Meyers)
The Texas Gulf Coast will be ground zero for a push to equip refineries to handle a flood of light crude unlocked in the U.S. shale boom, but the investments will be relatively conservative, a petrochemical consultant said Wednesday.
Refiners won’t spend the big bucks they dropped when they retooled to handle heavy, high-sulfur crude several years ago, largely because it’s cheaper and simpler to modify a refinery to process lighter crude, said Jim Jones, senior vice president at Dallas-based petrochemical consulting firm Turner, Mason and Company.
“It won’t be a $5 billion investment, it will be a couple million dollar investment, which is still big outside of the refining world,” Jones said.
Refiners have been scrambling to figure out how to process domestic crude that’s lighter grade than the heavier hydrocarbons typically imported from overseas, but they are primarily spending money on smaller projects to retrofit, upgrade or expand existing facilities, Jones said….
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…While most of the investment is happening within refinery gates, some midstream companies have joined the rush to process light crude, undertaking projects to handle oil pumped from the Eagle Ford Shale in South Texas, Jones said.
By the nature of their financial structure — many are master limited partnerships exempt from corporate taxes — these companies tend to be more nimble than refiners at investing quickly in new projects, said Sandy Fielden, managing director of Houston-based energy analysts RBN Energy.
Pipeline giant Kinder Morgan Inc., for example, is building a $360 million mini-refinery on the Houston Ship Channel that will split condensate into different components, including naptha, kerosene, diesel and gas oil. The first unit is slated to come online in the fall.
