EIA: Midwest, Rocky Mountains Strengthen Transportation Fuels Supply

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Researched by Industrial Info Resources (Sugar Land, Texas)--Expanded refinery capacity and utilization in the Midwest and Rocky Mountain regions have helped to reduce the regions' dependence on the Gulf Coast for transportation fuels, according to a new Energy Information Administration (EIA) study.

Fed by newly abundant and cost-advantaged crude, refinery capacity and production of transportation fuels in the Midwest and Rocky Mountains regions "grew significantly between 2005 and 2015, and fuels markets and supply chains in these regions have become increasingly self-sufficient," according to the EIA.

"The development of Canadian oil sands and the emergence of light, tight crude oil in the United States have provided refiners in the Midwest and Rocky Mountain regions with access to abundant, cost-advantaged crude oil supply and with opportunities to optimize crude slates and expand refinery capacity and utilization," according to the EIA. Meanwhile, demand for transportation fuels in the Midwest remained stagnant from 2010 to 2015, while still growing in the Rocky Mountains.

As a result, in-region refinery production of transportation fuels used during the five-year period---net of ethanol and biodiesel inputs--grew to 84% in the Midwest and 101% in the Rocky Mountains, up from 69% and 97%, respectively.

Industrial Info is tracking $9.6 billion in active refining projects in the Midwest and Rocky Mountains regions. One of those is Meridian Energy Group's (Irvine, California), planned 55,000 barrel-per-day (BBL/d) Davis Refinery in North Dakota. Meridian announced in February it had entered into memoranda of understanding with local and regional petroleum product distribution firms under which they would purchase up to 268 gallons per year of refined products from the facility. In August, Meridian finalized a contract with Vepica USA Incorporated (Houston, Texas) to perform engineering work for the plant, and announced it had finalized a licensing agreement for the refinery process technology with Axens North America Incorporated (Houston). For related information, see August 26, 2016, article - Meridian Chooses Engineering Firm, Process Technology for Grassroot Refinery in North Dakota. Phases 1 and 2 of the grassroot refinery project have a combined investment value of $900 million. Construction of Phase 1 is currently expected to start in September this year, with completion in 2018. For more information, see Industrial Info's project report.

In Minnesota, Flint Hills Resources (Wichita, Kansas) is planning a $500 million delayed coker unit replacement at its Pine Bend Refinery. The project is awaiting authorization for expenditures (AFE) approval. It would replace delayed cokers 21-1 and 21-2, each with 16,500 BBL/d capacity, with a new coker. Construction kickoff is currently expected to take place in October this year, with completion in late 2019. Flint Hills Resources is a subsidiary of Koch Industries (Wichita). For more information, see Industrial Info's project report.

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