BP today noted that all of the major new units associated with the Whiting modernization project have been successfully brought on stream. That sets the stage for hitting the first quarter 2014 target date for running broad amounts of cheap high-sulfur low-gravity Canadian crude which could make the plant one of the most profitable in the world.
The latest unit to see a startup was the 102,000-b/d new coker, which was brought on stream in mid-November. The next weeks and months should see barrels run through that unit as well as other refinery processing elements so that runs can progressively ramp up to running higher amounts of Canadian crude.
“The safe start-up of this world-scale coker is the last major step in unlocking the full potential of the Whiting Refinery for our shareholders,” noted Iaian Conn, the chief executive of BP’s downstream segment. He predicted that the reconfigured refinery is expected to deliver another $1 billion in operating cash flow per year, dependent on market conditions.
BP chief operating officer for U.S. Fuels Steve Cornell said that the project, along with the divestment of refineries in Texas City, Texas, and Carson, Calif., repositions the company’s fuels business in North America.
Canadian crude oil markets are anticipating relatively high runs for the Whiting facility by spring. Whereas Western Canadian Select (WCS) crude sold for $35- $40/bbl off WTI a month or so ago, the discount for that heavy grade of crude has narrowed to about $24/bbl in February and $21-$21.75/bbl in much of 2014. Accounting for transportation, the delivered price still works out to refinery crude costs that are at less than $80/bbl, pretty much giving BP Whiting and other refiners who run the heavy grades a large advantage versus refineries dependent on sweet crude.
Observers note that there is no rush to get the Whiting refinery up to its ultimate targeted performance. Operators will be painstakingly deliberate in testing units and different blends, and monitoring the impact on what is essentially a completely rebuilt refinery. As one consultant noted, “no one wants to be the next ‘Motiva’.” The reference is to the grand opening and full operations of Motiva’s Pt. Arthur expansion. Just weeks after trumpeting the new refinery, the company ran into serious corrosion and metallurgical problems that kept the new plant down for many months.
Once the heavier Canadian material becomes the primary feedstock at Whiting, the yield of the refining complex will increase substantially for diesel with a slight uptick in gasoline output as well. The refinery will make considerably less asphalt, since the “bottoms” of the barrels will be upgraded.
The scope of the project has no precedent within the U.S., with some engineers describing the work as an assembly of a new state-of-the-art refinery within an existing refinery. When all the testing is complete next year, the refinery will be able to run four times as much heavy sour crude as before the project. Almost every processing unit at Whiting saw a modification of some sort with the work involving 50,000 tons of steel and 380 miles of pipe.