Flint Hills Resources Considers Investing $500 Million at Texas Refinery

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Flint Hills Resources, LP, a wholly-owned company of Koch Industries, Incorporated (Wichita, Kansas), is evaluating a $500 million investment at its Corpus Christi, Texas refinery to increase production of low sulfur transportation fuels. If approved, construction could begin as early as late 2007.

Refiners continue to evaluate future crude oil types, with many considering sour crude conversions. The latest trend within the refining industry is to expand or add bottom of the barrel upgrading capacity to take advantage of the price difference between sour and sweet crude. A portion of the cost of the refinery upgrade, $250 million, will be to add a new resid cracker or delayed coker with a supporting sulfur recovery train.

The other part of the refinery upgrade will involve the addition of a hydrocracking or hydrotreating unit at a cost of around $250 million. Beginning in March 2006, Flint Hills will begin blending light cycle oil with home heating oil instead of diesel, which has a high sulfur content, thus reducing the amount of sellable highway diesel. Flint Hills is now considering options to increase production of low sulfur distillates transportation fuels by constructing a new severe hydrocracking or hydrotreating unit to process light cycle oil. Jacobs Engineering Group, Incorporated, (NYSE:JEC ) has an alliance agreement with Flint Hills and is preparing conceptual design for the light cycle oil project.

Flint Hills owns and operates three refineries with a combined crude oil processing rate of 800,000 barrels per day. The Corpus Christi complex is the largest, processing 300,000 barrels per day of crude oil and employing over 900. Formerly known as Koch Petroleum Group, LP, Flint Hills Resources, LP was established in January 2002. The company takes its name from the Flint Hills of Kansas, a scenic and culturally rich part of the Great Plains. The name honors Fred Chase Koch, co-founder of what is now Koch Industries, who loved the Flint Hills and established his first ranch there in the 1940’s.

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