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December 17, 2005 at 1:49 am #4283
Heather Cole Dec. 5, 2005
More Canadian oil would flow to ConocoPhillips‘ Wood River Refinery under the company’s plan to build a $1 billion crude oil processor.
The Houston-based company outlined its plans for investing a total of $4 billion to $5 billion at nine of its 12 U.S. refineries over the next five years at its annual analyst meeting Nov. 16 in New York. One of the facilities highlighted was the Wood River Refinery, ConocoPhillips’ largest in the United States, which would add a second coker, or crude oil processor.
The new coker could refine 55,000 barrels a day of sour crude oil, which is more easily found but typically less fluid and more difficult to refine than sweeter, lighter crude oils. That would mean a significant increase for the refinery, whose one coker has a limit of 18,000 barrels a day.
A cost for the construction of the second coker, scheduled for completion in 2009, was not given at the presentation, but Roxana, Ill., and Growth Association of Southwestern Illinois officials put the amount at $1 billion. The refinery is located in Roxana in Madison County.
New technology at Wood River and other refineries will allow ConocoPhillips to process lower quality crude oils more cheaply than sweeter, lighter oils, reducing the company’s costs down the road, said Lanny Pendill, energy analyst for Edward Jones. Pendill gave ConocoPhillips a Buy rating in a recent research report. Edward Jones also lists ConocoPhillips on its model stock portfolio, which highlights stocks Edward Jones researchers believe are the best investments. ConocoPhillips’ goal is to improve the efficiency of its plants and increase their reliability, Pendill said. “They’re taking a very good performance and pushing it higher.”
The investment in the refinery is connected to ConocoPhillips’ development with TransCanada Pipelines of a proposed 1,840-mile pipeline from Hardisty, Alberta. TransCanada is holding open houses for the public on the pipeline project through December, according to a November ConocoPhillips press release. That project also would be finished in 2009.
In Hardisty, ConocoPhillips is building facilities to extract oil from oil sands with French oil and gas company Total SA with production to start in 2006. Canada’s stability, steady oil supply, and lack of threats from hurricanes make Canada a key position for ConocoPhillips, Pendill said.
Including the investment in the refineries, ConocoPhillips plans to spend $13.4 billion in 2006, with some money also to be spent on worldwide exploration and production and the purchase of a refinery in Germany. The announcements came a few weeks after ConocoPhillips reported $3.8 billion in profit on $49.7 billion in revenue in the third quarter of 2005, up from a $2 billion profit on $34.7 billion in revenue in the same period last year. The increase was due to a rise in crude oil prices. Prices were affected by hurricanes disrupting crude oil production in the U.S. Gulf of Mexico, increased global consumption and concern over supply, ConocoPhillips said in its quarterly report. The petroleum and natural gas producer and refiner had revenue of $137 billion in 2004.
The Wood River Refinery refines 306,000 barrels of oil per day to produce gasoline, jet fuel, diesel, asphalt, propane and other products, and supplies part of the St. Louis region, Chicago, Indiana and Ohio, said Melissa Erker, spokeswoman for the refinery. Not all the oil needs to be processed through the coker. Herman Seedorf is the refinery’s manager.
Erker declined to comment on the proposed new coker, saying plans were not finalized. A spokeswoman at ConocoPhillips didn’t return phone calls seeking comment.
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