Engineering News

ConocoPhillips to Upgrade Coker at Montana Refinery
May 17, 2010

Sometime in late July, while most Billings residents are asleep, a massive truck will roll through town, carrying tons of steel that will be used in a $50 million upgrade to the ConocoPhillips refinery.

Steve Steach, manager of the Billings refinery, said Thursday that the project involves replacing the two cylindrical drums that are part of a $150 million coker, which was completed in 1992. Each new drum is 100 feet long and 24 feet in diameter and weighs 300 tons.

In a related development, ConocoPhillips is moving about five people to Billings as the company focuses on production in the Bakken oil field in North Dakota and Montana.

Moving the coke drums from Japan, where they are being fabricated, to Billings requires a complicated permitting system and careful planning. As part of the project, CononcoPhillips must temporarily relocate 800 power lines to accommodate the heavy transport vehicles. Because the loads are so long and heavy, the trucks will take back roads, travel no faster than 35 mph and travel between 10:30 p.m. and 6 a.m., when traffic is lightest. State police will escort the trucks through Idaho and Montana, according to information provided by ConocoPhillips. The special trucks have numerous axles that spread the load over a large area.

The steel drums are an integral part of the coker, a unit that applies heat and pressure to heavier, less valuable components of crude oil, converting them into more useful products such as gasoline, diesel and jet fuel. The coker unit was completed in 1992, one of a series of investments that have been made in the three Billings-area oil refineries.

The upgrade to the Billings coker will be completed early next year. But ConocoPhillips has placed on hold plans to install a $500 million refining unit designed to handle heavier crude oil, Steach told the Big Sky Economic Development Authority's board of commissioners.

ConocoPhillips Chief Executive Jim Mulva mentioned the large-scale refinery upgrade during a visit to Billings in 2006. However, those plans have since been shelved. Last fall, ConocoPhillips announced a plan to dispose of $10 billion in its less-profitable assets over two years. As part of that plan, ConocoPhillips agreed to sell its interest in Syncrude, a joint venture developing the tar sands in northern Canada. Sinopec, a Chinese oil producing firm, is paying $4.65 billion for the ConocoPhillips stake in Syncrude.

Steach said ConocoPhillips has a long-term goal of investing more in the more profitable "upstream" sector, which involves exploration and production of oil and gas. By comparison, refinery operations are less profitable.

Some analysts have speculated that ConocoPhillips may be interested in selling some of its refineries as part of its restructuring plan. While the Billings operation is the smallest of the company's 16 refineries, it is also profitable and represents a strategic asset. "I'm not worried about the Billings refinery" being sold, Steach said.

ConocoPhillips reported $2.1 billion in first-quarter profits, up from $800 million for the same period in 2009, in part because of improving oil prices.

The company reported that it spudded three wells -- that is, started drilling -- in the Bakken shale play during March, and three more wells were placed into production.

Source: Billings Gazette, Montana

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