BP Evaluates Converting U.S. Refineries to Process Sour Canadian Crude

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Researched by Industrial Info Resources (Sugar Land, Texas). BP plc (LSE:BP) (London, United Kingdom) is currently gearing up to expand its Cherry Point refinery, located in Blaine, Washington, and its Whiting Refinery, located in Whiting, Indiana. The Cherry Point refinery is the fourth largest refinery on the West Coast processing 225,000 barrels per day and the Whiting refinery is the fourth largest refinery in the U.S. processing 410,000 barrels per day. The two BP refineries are requiring significant investments to be able to process the new feedstock of sour Canadian crude.

The refineries need to perform modifications to existing units and construct new units for the conversion. The Whiting location will require an estimated $1 billion to perform the upgrade. The location currently processes about 1/3 Canadian, 1/3 Sweet Crude from the Southwestern United States, and the remaining 1/3 from mixed grades from foreign or offshore domestic sources. The refinery is evaluating options of possibly processing 80% of Canadian crude oil. The Cherry Point location will invest an estimated $125 million dollars. The Cherry Point refinery once processed strictly Alaskan North Slope crude oil, but currently is considering alternative feedstocks to improve the flexibility of the refinery.

BP has locations in 100 countries to include five refineries located in the U.S. The other three U.S. refineries are located in Carson, California; Texas City, Texas; and Toledo, Ohio. The company employs about 104,000 people across the globe. BP market capitalization in 2005 is about $225 billion, which makes it the fifth largest company and the largest non-U.S. company listed with the New York Stock Exchange. In addition, BP has capital expenditures of an estimated $6 billion and employs about 37,000 people in the United States.

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