Engineering News

Alon Reiterates Calif. Refinery Plans
March 05, 2010

The company hoping to buy Big West refinery on Rosedale Highway in Bakersfield reaffirmed that it hopes to resume refining operations there if it prevails in an auction set for later this month.

Speaking with industry analysts in an earnings conference call Wednesday, Alon USA Energy Inc. CEO Jeff Morris said that restarting Big West after more than a year of near inactivity would be fairly inexpensive. He added that Alon intends to "integrate" the refinery by pipeline with another complex it owns in Los Angeles County -- a disputed proposition that he declined to discuss in detail.

"It's hard to predict how long the (pipeline) permits will take," Morris said.

His comments yielded little new insight, and some in the industry still wonder about the logistics of Alon's plan. But the statements did provide a level of reassurance that the company is serious about refining at Big West rather than just remove certain critical equipment and possibly redevelop the site, a move that would likely mean fewer well-paying jobs for the area.

Alon, the Dallas-based subsidiary of Alon Israel Oil Co. Ltd., announced last month that it has offered $40 million for the refinery, making it the lead bidder in an auction set for March 19. Alon also said it would connect Big West by pipeline to a refinery complex it owns in Long Beach and neighboring Paramount.

The pipeline proposal has drawn skepticism within the industry because the company said it plans to ship gas oil, a refining byproduct, from L.A. County to Bakersfield for further processing, and not the other way around. To do so, Alon would have to build a new pipeline, which several observers have said would be costly and time-consuming.

Morris sidestepped an analyst's question about whether Alon would be willing to run Big West independently while it works to complete the proposed pipeline, calling that consideration "premature."

But he did say Alon officials have taken a close look at the plant, and concluded that it could be ready to operate after a small amount of preparatory work.

"The plant's pretty much ready to run," he said.

Big West was closed early last year after Utah-based owner Flying J Inc. filed for Chapter 11 bankruptcy protection Dec. 22, 2008. About 175 plant workers were laid off as a result.

Union official Ed Huhn said Thursday that Alon's bid encourages former refinery employees hoping to return to work there.

"We are happy that (Alon) is going to buy the refinery and that they are going to go through with that and run it," Huhn said. "We feel that they're a good business sense company."

But he said the pipeline idea still confuses him.

"The permitting on that is really tough," Huhn said.

"It'll be interesting to see how that really plays out."

Source: The Bakersfield Californian

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