November 21, 2008 at 11:31 am #3305
Whiting Refinery project moves ahead despite lower crude prices
BY ANDREA HOLECEK email@example.com
Tuesday, November 18, 2008
WHITING | BP is moving full speed ahead with the Whiting Refinery’s $3.8 billion project to process heavy Canadian crude oil from Alberta tar sands despite the recent downward spiral in the price of crude.
The project was announced in 2007 when crude oil was selling at more than $60 a barrel. But as crude oil prices dropped, concern about the feasibility of the project rose.
Several oil industry analysts have said that with oil in the $50-per-barrel range, some operations on the tar sands could become unprofitable. That’s not the case with the Whiting Refinery project, BP corporate spokesman Scott Dean said Monday.
“Basically, we test all our major projects against a number of different scenarios including crude oil prices,” Dean said. “This is a long-term project, and we take a long-term view. We analyzed the project at above and below that ($60 a barrel) number.”
Crude oil closed at a 22-month low of $55 a barrel Monday. The Whiting project won’t begin producing until 2011, Dean said. “If you look at history, you’ll see the world continues to demand more both conventional and nonconventional forms of energy, including crude oil and natural gas,” he said. “Traditional volumes of oil and gas won’t fill the demand. We base our plans on this long-term view.”
Ron Planting, analyst for the American Petroleum Institute, said even though the price of oil affects certain projects, he doubts any companies based projects on the peak crude oil price of $145 a barrel.
“Oil prices are very volatile, and companies know they’re going to go up and down. And they plan on those viable for the long-term period,” Planting said. “(BP Whiting Refinery project) will help diversify our North American fuel supply.”
The four-year Whiting project is expected to help the country reduce its reliance on the oil supply from the Middle East by allowing BP to refine heavy Canadian crude from the oil sands of Alberta — where an estimated 1.4 billion barrel reserve awaits, BP has said.
Currently, 10 percent of the nation’s fuel supply is being imported because the U.S. refining capacity lags the amount it consumes. The project would increase Whiting gasoline production by 1.7 million gallons a day, BP officials have said.
As of now, 400 contractors are working on the project, a number that will increase by 1,000 in 2009, Dean said.
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