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RE: Lima Refinery Banking on BP Toledo JV boost funding for Heavy Crude production….Unlikely

Home Forums Refining Community Refinery News Lima Refinery Banking on BP Toledo JV boost funding for Heavy Crude production….Unlikely RE: Lima Refinery Banking on BP Toledo JV boost funding for Heavy Crude production….Unlikely

#7004

Charles Randall
Participant

This comes under the “Wishful thinking” title, the gap between processing heavy crude and very heavy bitumen crude is much less than the gap between sweet crude and heavy crude (which is why Husky opted for Toledo vs. retooling Lima).
 
It is also wishful to think the additional cash flow from Toledo JV will boost Lima chances for capital to do heavy crude.
Incremental heavy crude capacity boost will always be cheaper for the Toledo refinery than Lima.  The only bright spot is that it will continue to point out that Lima must upgrade or shutdown – which is where it was with previous 2 owners (Bp & Valero) were…..and they chose shutdown or sell the sweet crude refinery. Lima also lacks Toledo’s ability to make asphalt as alternate to coker charge.
 
 Given the extreme high price outlook for conventional sweet crude plus its large volatility due to mutual fund trading – it will become imperative for Husky to upgrade Lima. 
 
Upgrading to run heavy conventional crude doesn’t make a lot of sense since the additional cost to go to heavy bitumen crude is only slightly more. 
 
Think refrigerators – the bulk of the cost is for a basic unit & comparatively the much larger ones are very cheap compared to the initial cost, the only reason to limit the size would be based on the space available to put it!  Cokers follow much the same path on incremental cost size – until they bump limitations of downstream processing units (ie FCC / Alky / Reformer / HDS).
 
Regards

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