BP Plans $3 Billion Reconfiguration of Midwest Refinery to Handle More Canadian Oil Sands Crude
22 September 2006
BP has entered the final planning stage of a $3 billion investment in Canadian heavy crude oil processing at its Whiting Refinery located in northwest Indiana.
BP America Inc. Chairman and President Bob Malone said the company intends to reconfigure its Whiting Refinery so most of its feedstock can be heavy Canadian crude from the oil sands. Reconfiguring the refinery also has the potential to increase its production of motor fuels by about 15%, which is about 1.7 million additional gallons of gasoline and diesel per day.
The Whiting Refinery currently produces about 4.5 billion gallons of transportation fuels each year, enough to supply more than 5 million vehicles.
BP is pleased to invest in a project important to the economies of both the United States and Canada. BP’s investment increases the diversity and security of oil supplies that can be refined into gasoline, diesel and other petroleum products in demand by consumers in the Midwestern United States. It also provides a significant market for Canada’s abundant heavy crude oil resources. After our investment, the refinery will have the potential to supply motor fuels to about 6 million automobiles.
—Bob Malone
Construction of the project is tentatively scheduled to begin in 2007 and be completed by 2011, pending regulatory approvals. The proposed Whiting Canadian extra heavy oil project includes installing the following major process units and upgrades to existing equipment:
A world-scale coking unit, a revamped crude distillation unit and petroleum coke handling facilities that triple resid conversion capacity;
A hydrogen production plant;
A gas oil hydrotreater and revamped existing hydrotreaters to maintain compliance with sulfur specifications for fuels;
Sulfur recovery facilities; and
Refinery infrastructure facilities to support the additional heavy crude oil processing.
The replacement processing units and enhancements to existing refinery units will increase Canadian heavy crude oil processing capability by about 260,000 barrels per day.
In 2005, BP announced plans to invest more than $130 million on new ultra low-sulfur diesel facilities at the Whiting refinery with the addition of a new Distillate Hydrotreater (DHT). The new unit has the capacity to produce approximately 36,000 barrels per day of the ultra low-sulfur diesel product.
The Whiting refinery is BP’s second-largest and the largest in the Midwest region. The Whiting refinery currently produces approximately 16 million gallons of product daily, half of it gasoline, and about one-quarter of it diesel. Other major products produced beside diesel fuel include furnace oil, asphalt, propane, xylene and petroleum coke.
This shows how important non-OPEC oil is to the western world. If you think outside the box, you see alternatives like electric and SNG that can do the same thing...transport, without going to such extremes. Some talk about the energy balace of ethanol, but after you use all the NG to process the tar sands and clean up all the mess, maybe this is not exactly a smart method either.
Posted by: SJC | 22 September 2006 at 07:54 AM
For every barrel of synthetic oil produced in Alberta, more than 80 kg of greenhouse gases are released into the atmosphere- brought to you by the "beyond petroleum" company.
Posted by: fyi CO2 | 22 September 2006 at 08:07 AM
If BP & partners had to pay to pollute they'd think about how to reduce that cost. But they don't. This is an 'external cost' in market economics. See more info here on the topic.
Posted by: Ron Fischer | 22 September 2006 at 09:21 AM
Ron, no BP wouldn't "think about how to reduce that cost".
What they'd do is simply charge their (largly captive) market more for the product. And remember that if BP is held accountable for "external pollution" then so will every other oil major around the world.
So we'd end up paying more for our fuel. Which simply impacts our quality of life.
Andy
Posted by: Andy | 22 September 2006 at 09:40 AM
A ruined environment impacts our quality of life too, no? I guess we have to discount the cost of ruin now vs ruin later to compare it effectively.
Posted by: David | 22 September 2006 at 10:15 AM
Gone were the days, when Oil companies dug 100 feet (30 meters) and found lot of oil.
Now they have to dig miles (kilometers) deep to find any oil, and also spend lot of energy and time in converting those sands into usable oil.
The Input-Output margin is declining and also billions of dollars have to be poured to make the Oil economy running.
Meanwhile for Ethanol, Input-Output is widening and soon they will catch up with Oil.
Posted by: Max Reid | 22 September 2006 at 01:16 PM
The Saudis and Aramco have had and still do have one of the lowest cost of production for oil. It might cost them less than $5 to produce a barrel that they sell for more than $50. 10X margins are something drug companies enjoy, but the volume of oil that Aramco can produce makes them much richer. They can pump on the order of 10 million barrels a day. They were said to be making more than $200 million a day extra just on the price rise in recent years.
Posted by: SJC | 23 September 2006 at 07:14 AM
CO2:
Combustion of one barrel of oil produces about 400 kg of CO2. So 80kg is not as bad as sounds.
Posted by: Andrey | 24 September 2006 at 08:34 PM
Lucky us in Wisconsin, we get a new pipeline across our state to carry this crude to IN.
http://biz.yahoo.com/bizj/060828/1337602.html?.v=1
Posted by: efo | 26 September 2006 at 05:44 AM
I am opposed to this expansion in Whiting IN. It is unacceptable to dump daily as additonal 1,584 pounds of ammonia and 4,925 pounds of sludge into the Great Lakes all in the name of processing Canadian oil. Where do these guys get off advertising on TV as if they are interested in protecting the environment only to pollute one of our last great natural resources we have.
Posted by: James Quasney | 15 July 2007 at 05:18 PM
Dear Mr.Bob Malone,
Chairman and President of BP America Inc.
I am Evgeny Krasilnikov, Dr. of Sci. (Technical), Hrofessor. I am specialist in the areas of Space Energy Systems, hydrodynamics, heat transfer processes,prevention of destructive tropical cyclones, hurricanes and tornadoes.
Last 12 years I have been developing highly effective fundementally new Oil Treatment Technology. Now I withmy scientific group have received some unique results. For example: the extra heavy crude oil from Alberta (Canada) with API = 12.08 has been treated at temperature t=35 C and presure p = 3-5 atm to
API=33.76 without catalists and hydrogen! Energy consumption herewith was 8.53 KWh/bbl.
Frommy point of view BP's Project inrespect treatment of Canadien heavy crude oil is extreamly expensiveand especially expensive willbethe treatment process itself.
If you have interest to my technology, please send me your Email address and I will send description of the Technology and some results.
Merry Christmas and Happy New 2008 year,
Evgeny Krasilnikov
Posted by: Evgeny Krasilnikov, Dr. of Sci., Prof. | 28 December 2007 at 09:10 AM