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EnCana and ConocoPhillips Begin Wood River Refinery Expansion

EnCana Corporation, through its 50-50 integrated oil venture with ConocoPhillips, will begin construction this month of a Coker and Refinery Expansion (CORE) project at the Wood River refinery in Roxana, Illinois. The project, which had been challenged (earlier post), recently received regulatory approval.

The project will expand the refinery’s upgrading capacity for heavy crude oil as well as increase production of transportation fuels for the US Midwest market.

The $3.6-billion CORE project is expected to be completed over the next three years. It will:

  • Add a 65,000 barrels-per-day (bbls/d) coker to enable processing of growing supplies of heavy crude oil;

  • More than double heavy crude oil refining capacity to 240,000 bbls/d;

  • Increase total crude oil refining capacity by 50,000 bbls/d to 356,000 bbls/d;

  • Increase the clean product yield by 10% to 89%; and

  • Eliminate 40,000 bbls/d of low-value asphalt production.

In parallel with the Wood River refinery expansion, the integrated oil venture has approved upstream expansions at Foster Creek and Christina Lake oil sands operations in Alberta where EnCana expects gross bitumen production capacity will grow from the current level of 70,000 bbls/d to about 180,000 bbls/d in 2012. Further expansions are planned to increase production capacity to 400,000 bbls/d by 2016.

In May, EnCana announced plans to split into two independent, energy companies— one an integrated oil company with the working name of IOCo and the other a pure-play North American natural gas company. (Earlier post.) The EnCana reorganization is subject to shareholder and regulatory approval, and is expected to be completed in early 2009.

When the CORE project is complete, IOCo will have two refineries in the US, each with significant heavy oil processing capacity. Combined, the Wood River refinery and the Borger refinery in Texas will have a total heavy oil capacity of 275,000 bbls/d, placing IOCo among the leading heavy oil refiners in the US, according to Brian Ferguson, EnCana’s Chief Financial Officer, who is also the designated President and CEO of IOCo.



With the future being heavier oil to refine (and its cheaper), this is a smart move for the refiner...

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