Canada-based Husky Energy plans to modify the crude and coker units at its Lima, Ohio refinery to increase capacity for heavy Canadian crudes while maintaining the refinery’s ability to refine light crude oil. Engineering work is underway and the equipment upgrades are scheduled to take place during planned turnarounds in late 2015 and late 2016.
Husky has sanctioned the new crude oil flexibility project at its Lima refinery which will allow for the processing of up to 40,000 bpd of heavy crude feedstock from Western Canada starting in 2017. Canadian heavy crude trades at a $23 per-barrel discount to the U.S. crude benchmark, West Texas Intermediate. The estimated cost of the upgrade is approximately $300 million and will provide an efficient and cost effective way to process a greater variety of crudes.
Canada’s No. 3 integrated oil company approved preliminary engineering designs for the project in the third quarter 2013. KBR announced that it had secured a contract to do such a revamp job on a Midwest light-sweet crude refinery, but Duvall declined to say KBR was the firm on Husky’s project.
The project is part of Husky’s focused integration strategy and supports the company’s growing heavy oil business in Western Canada, where a strong portfolio of existing and planned projects is expected to increase thermal oil production to 55,000 bpd in 2016. It is also aligned with Husky’s program to enhance its ability to respond more quickly and efficiently to market conditions by increasing feedstock, product and market access flexibility in its refining segment.
Valero Energy Corp. which sold the Lima plant to Husky for $1.9 billion in 2007, had considered a $2 billion heavy crude conversion project at the refinery as part of a possible joint venture with Canada’s EnCana Corp. The companies dropped the idea in late 2005 when Valero decided the cost to revamp the refinery was too high and other potential projects would bring better returns.
Energy Business Review