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Alon to receive crude by rail at Louisiana refinery in June
Alon Energy USA will start receiving cut-price inland U.S. crude by rail next month at its Louisiana refinery when the company completes a project to refurbish an offloading facility there, Chief Executive Paul Eisman told analysts.
He said the 80,000-barrels-per-day Krotz Springs refinery will receive 6,000 bpd of crude by rail. The facility can handle up to 14,000 bpd, but the refining company is restricted by limitations in railroad operations and railcar availability, he said.
“We will be working to get around these limitations and take additional steps to increase our capability to receive and process price-advantaged crude oil,” Eisman said during the company’s first-quarter earnings conference call.
The company will use 200 railcars it had deployed to move gasoil and asphalt in its California refinery system, which remains shut awaiting permits to build a rail offloading facility.
Alon shut the 94,000 bpd California system last autumn because it wasn’t profitable on a combination of being stuck with expensive imported oil and low asphalt demand.
The company aims to build an offloading facility to bring in cheaper inland U.S. crude by rail in 2014. Other refiners are increasingly doing the same to tap growing inland crude output that lacks pipeline infrastructure to move it to refining hubs.
Eisman said rail adds flexibility to switch between various shale oil plays in Oklahoma, Colorado, North Dakota’s Bakken or West Texas to tap the cheapest crude at the moment.
“That’s one of the nice things about rail systems, is this flexibility to move those cars around to markets to provide the greatest opportunities, so we will try to take advantage of it in that way,” Eisman said.
Eisman said the Krotz Springs refinery is expected to process a total of 30,000 bpd of cheaper inland crude in the second quarter.
He said the rail shipments will be manifest, or trains that carry other types of freight, as opposed to crude-only unit trains.
Eisman also told analysts that the Krotz Springs plant’s throughout will be about 57,000 bpd in the second quarter as repairs continue on a reformer damaged by fire on April 25.
The company’s 70,000 bpd refinery in Big Spring, Texas, is expected to have a slightly higher average throughput of 72,000 bpd in the second quarter, he said. (Reuters)
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