Alon USA receives go ahead for Bakersfield, CA rail terminal and refinery project; Bakken light crude
Alon USA Energy, Inc. has received the necessary approval from the Kern County Board of Supervisors to construct a new rail facility at the Bakersfield refinery and to make modifications to the refinery that will allow it to process light crude—e.g., Bakken Crude. The permit allows Alon to construct a double rail loop from a new spur connection off of the existing BNSF Railway capable of receiving two unit trains (a unit train contains about 100 cars) per day of crude. The refinery’s 70,000 barrels per day (bpd) maximum crude processing capacity is not being increased.
The project also entails the addition of up to three boilers; construction of process unit upgrades and/ or modifications; repurposing of existing tankage; and relocation and modernization of existing Liquefied Propane Gas (LPG) truck rack and upgrades to the sales rack.
Alon expects to provide information on the cost of constructing the new rail facility and the expected crude-by-rail volumes at the time of its third quarter 2014 conference call. Construction of the rail facility is expected to be completed by the end of 2015.
Background. The existing refinery has been used as a petroleum refinery since 1932. Current refinery process units include crude distillation; delayed coking; hydrocracking; and catalytic reforming. Current products include gas oil, gasoline, diesel fuel, and petroleum coke. The refinery also includes a number of ancillary and support facilities including steam boilers, process heaters, cooling towers, storage tanks and interconnecting pipelines; and a terminal with truck and rail loading facilities.
Although the existing refinery has a maximum rated crude processing capacity of 70,000 bpd, due to a 2008 bankruptcy of the prior owner, crude oil refining was temporarily suspended. In 2011, the Alon Bakersfield Refinery resumed refining in numerous process units to convert gas oil produced by its affiliated refinery in Paramount, California into finished fuels. Alon intends to resume operation of several existing process units under existing permits, including a return to crude oil refining.
The overall objectives of the project are to (1) provide greater flexibility for the existing refinery to utilize a variety of crude oils that can be processed in order to better manage operational costs and to increase efficiency of onsite production; and (2) expand the existing crude terminal operations of the facility.
In the project’s Environmental Impact Review (EIR) submitted to the County, Alon noted the issues surrounding the volatility of Bakken crude, the recent rail accidents involving the crude, and the government’s current state of response.
Alon said it would work with the rail carriers delivering crude oil to the rail terminal to ensure compliance with any Emergency Order (EO) issued by the US Department of Transportation (DOT) related to requirements for rail carriers to notify State Emergency Response Commissions (SERCs), and others as specified by the EO, regarding the expected routing of the Project’s unit trains of Bakken crude oil. The notice will include, but not be limited to:
reasonable estimate of the number of trains carrying 1,000,000 gallons or more of Bakken crude oil, per week and by county;
with the crude oil identified and described in accordance with 49 CFR part 172, subpart C;
with the emergency response information required by 49 CFR part 172, subpart G; and
the routes over which the crude oil will be transported.
Alon USA Energy, Inc., headquartered in Dallas, Texas, is an independent refiner and marketer of petroleum products, operating primarily in the South Central, Southwestern and Western regions of the United States. Alon owns 100% of the general partner and approximately 82% of the limited partner interests in Alon USA Partners, LP, which owns a crude oil refinery in Texas with an aggregate crude oil throughput capacity of approximately 73,000 barrels per day.
In addition, Alon directly owns crude oil refineries in Louisiana and California, with an aggregate crude oil throughput capacity of approximately 144,000 barrels per day. Alon is a leading marketer of asphalt, which it distributes through its asphalt terminals predominately in the Western United States. Alon is the largest 7-Eleven licensee in the United States and operates approximately 300 convenience stores in Texas and New Mexico.
Kern County Alon Bakersfield Refinery Crude Flexibility Project documents