Engineering News

Husky Readies Plans for Refinery
Monday, July 21, 2008

A year after taking over the Lima Refinery, Husky Energy officials are on the verge of announcing their plans for the plant's future.

The Canadian-based Husky Energy Corp. paid $1.9 billion for the Lima Refinery last July. Officials have since said they intend to spend another $2 billion to $3 billion to upgrade the facility so they can use it to refine heavy crude drawn from the company's Canadian oil holdings.

After almost a year of research and a $150 million engineering study, company officials are on the verge of making a final call on exactly what upgrades the plant will undergo and how much they will spend. Officials are limited as to exactly what they can say. Husky officials are set to release the 2008 second quarter financial report at the close of market Wednesday and can say little about their plans until after the numbers are released.

"We're in sort of a blackout right now as far as information goes," said Corporate Communications Director Grahm White. "I can say we have completed with the conceptual engineering of the reconfiguration of the Lima plant and are looking at doing some more detailed engineering and increasing its capacity for heavier crude."

White did say the company definitely will be retooling the Lima plant to refine heavy crude, as opposed to the bitumen it originally had considered sending to Lima. And while he was unable to cite specific numbers on the cost of the retooling, he said it would likely exceed the $2 billion figure.

"We only know what Valero looked at when they were there. That was close to $2 billion and now we're talking several years later so it will likely be more," White said.

When the company first purchased the local refinery, it was up in the air as to whether it would use it to process heavy crude or the thick, sand-soaked bitumen drawn from its Sunrise oil sands. The choice was essentially made in December, when company officials cut a deal for half ownership in BP's Toledo refinery. Toledo was better positioned to handle the bitumen -- which requires a great deal more refining -- so Lima gets the heavy crude drawn from other Huskyowned property east of the oil sands.

White said company officials have been slow to release specifics because they weren't certain exactly what they would do and didn't want to disappoint Lima workers if plans changed.

"We were very careful. Certainly, a reconfiguration was likely ... but we didn't want to commit one way or the other and have our plans change. We knew Lima had had that happen before and we were sensitive to that," White said.

White said he could not speak to the time frame for the reconfiguration or whether it would mean more jobs for Lima in the long-term, but was confident the change would mean more work for some.

"It's very likely we will need at least what we have now. At least in the near-term, the construction will certainly require more workers," White said.

Source: The Lima News, Ohio

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