Jacobs Engineering Group Continues Study of Premcor Refinery Upgrade in Ohio

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). The Premcor Refining Group Incorporated, an indirect wholly-owned subsidiary of Premcor Incorporated (NYSE:PCO)(Old Greenwich, Connecticut) and EnCana Midstream and Marketing, a partnership of EnCana Corporation (TSX:ECA) (Calgary, Alberta) expect to complete a joint preliminary design and engineering study in July for an upgrade of Premcor's Lima, Ohio, refinery to process Canadian heavy crude oil blends. Jacobs Engineering Group (NYSE:JEC) (Pasadena, California) was selected to conduct the study. If the economics prove to be favorable, Premcor and Encana will form a 50-50 joint venture. Premcor would provide the Lima refinery, currently valued in excess of $1 billion, as its contribution to the joint venture, and Encana would contribute an equal amount of cash.

The initial cost for the upgrade was believed to require approximately $1 billion of capital investment, but the cost has since escalated to $1.4 billion. The capacity of the refinery will increase from 160,000 b/d up to 200,000 b/d, and will have the ability to produce more gasoline and highway diesel fuels for the region. The upgrade will include modifications to existing crude unit, a new 105,000-barrel-per-day (bbl/d) vacuum unit, a 70,000 bbl/d delayed coker, a 45,000 bbl/d hydrocracker and supporting hydrogen unit, a sulfur recovery complex, and a reformer upgrade. Construction could commence in late 2006, with completion set for the end of 2008.

Premcor is one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, heating oil, petrochemical feedstocks, petroleum coke, and other petroleum products in the United States. They own and operate refineries in Port Arthur, Texas, Lima, Ohio, Memphis, Tennessee, and Delaware City, Delaware, with a combined crude oil throughput capacity of approximately 800,000 barrels per day (bpd). Premcor recently announced that it will be acquired by Valero in an $8 billion transaction, which is scheduled to close by the end of 2005.

EnCana Corporation is one of North America's leading independent oil and gas companies, with an enterprise value of more than $30 billion. The company is focused on the development of huge unconventional reservoirs where large-scale repeatable drilling programs can deliver predictable and profitable production growth.

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