News Post
Montana Refinery Plans to Triple Capacity
Calumet plans to triple its production at what used to be a tiny niche refinery in Great Falls, Mont. The refinery, purchased in late 2012, has a nameplate capacity of just 9,500 b/d, but Calumet just received an air quality permit related to construction that would take output up to 30,000 b/d.
The project would add a new crude unit that would process heavy sour Canadian crude, which currently fetches the largest discount to crude benchmarks on the planet. It would also see the construction and commissioning of a hydrocracker that would convert gasoil streams to ultra-low-sulfur distillates as well as a hydrogen plant that would support the hydrocracker. Once work is completed, the refinery will be significantly more complex and efficient, sources say.
Calumet paid a steep price of $120 million when it purchased the refinery from Connacher Oil and Gas Limited, but it has some of the best operating costs in the country. It can use heavy sour Canadian crude that currently sells for about $33/bbl under WTI or approximately $68.50/bbl at presstime. Forward prices for the benchmark heavy Canadian blend see the discount narrow, but it is still available for $20-$27/bbl under WTI through 2014, fob storage in Alberta.
Based on local refined products prices, the plant has some of the best economics in the country. Rack gasoline sells for about $2.86/gal or approximately $120/bbl in the Billings area and diesel at $3.20/gal works out to a $134/bbl price. Heavy crude oil can be laid in to the plant for just over $70/bbl, so light products' output from the facility can generate $50-$64/bbl cracks.
There are questions about the need in the region for another 20,500 b/d of capacity, however. The Rockies tend to be slightly short of gasoline during the summer, but long on motor fuel in the autumn and winter. With a small population that is not seeing much growth, the additional production could be difficult to place.
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