Husky Energy Evaluates $1 Billion Investment to Upgrade Refinery in Ohio

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Researched by Industrial Info Resources (Sugar Land, Texas)--Husky Energy Incorporated (TSX:HSE) (Calgary, Alberta) is evaluating options of possibly investing $1 billion at its Lima, Ohio, refinery, which the company acquired in May 2007 from Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas). Husky Energy purchased the Ohio refinery for an estimated $1.9 billion to expand its downstream business sector. The company will reconfigure and expand the refinery to process sour and heavy crude feedstock from oil sands in Western Canada. An engineering firm is expected to be selected by fall 2008 to begin front-end engineering design work. Full approval for the project is expected in early 2010. Husky Energy will select an engineering, procurement and construction firm in 2010 for the project, which is expected to begin construction in spring 2011 and take about 24 months to complete.

The current reconfiguration project will include modifications to the crude unit, a new coker, hydrocracker, sulfur recovery unit, coker naphtha unit, hydrogen unit, and supporting off-site utilities. The Lima Refinery has been evaluated to process Canadian crude for many years. In December 2005, a $2 billion joint venture between Valero and EnCana Corporation (NYSE:ECA) (Calgary) to process Canadian sour crude was annulled. In 2006, Valero was planning a $400 million reconfiguration project that was canceled because of the sale of the refinery.

Husky Energy is one of Canada's largest energy and energy-related companies. It has more than $21 billion in assets and employs about 4,100 people. The Lima refinery was established in 1886 and employs 384 people. The refinery processes 165,000 barrels per day of crude oil and produces about 25% of the gasoline consumed in Ohio.

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