Like Oil on Water ConocoPhillips Rises to the Top of U.S. Petroleum Refiners for Capacity and Capital Spending

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). In the past two years, ConocoPhillips (NYSE:COP) (Houston, Texas) has become the largest petroleum refiner in the U.S., through a series of mergers and acquisitions. During the same time period, the company has initiated a large number of capital project studies resulting in over $1.8 billion in potential future spending at the company's fourteen petroleum refineries in the U.S. Most of this project work is concentrated on environmental compliance with low sulfur fuel mandates in the U.S.

The creation of the largest U.S. petroleum refiner was the result of two major mergers, both of which occurred during the last two years. In 2001, Phillips Petroleum merged with TOSCO Refining giving the company eleven refineries and about 1.69 million barrels of capacity. In 2002, Conoco and Phillips merged creating ConocoPhillips and gave the new company a total of 16 refineries.

As part of the merger agreement, the company was forced by the Federal Trade Commission to sell two of its Rocky Mountain region refineries. This included the sale this summer of the Woods Cross refinery (Plant 1015323) located in Utah, which was acquired by Holly Corporation (Dallas, Texas). ConocoPhillips also sold its Denver Refinery (Plant 1015830) to expanding Canadian oil sands producer, Suncor Energy Incorporated (NYSE:SU) (Calgary, Alberta). For details on the Suncor transaction see archived IIR Industry Alert: Suncor Energy Steps Up Oil Sands Upstream and Downstream Capital Spending.

In July, ConocoPhillips announced it had purchased select assets of Premcor Incorporated's (Old Greenwich, Connecticut) Hartford, Illinois refinery, including the coker, crude unit, catalytic cracker, alkylation unit, isomerization unit, a portion of the site utilities and a portion of the storage tanks used at the Premcor site (Plant 1012811). The Hartford refinery was mothballed in October of 2002, after Premcor decided it couldn't afford the cost of upgrades to the plant due to low sulfur fuel regulations. The Hartford units will be integrated into ConocoPhillip's neighboring Wood River Refinery (Plant 1009742) and will allow Wood River to process heavier crudes.

Today, ConocoPhillips has a petroleum refining capacity of 2.24 million barrels at 14 refineries, making it the largest petroleum refiner in the U.S. Valero Energy Corporation (NYSE: VLO) (San Antonio, Texas), which has followed a similar merger and acquisition path with ConocoPhillips, runs a close second with 2.20 million barrels a day of refining capacity at 15 refineries.

With its large base of U.S. refining capacity, ConocoPhillips (NYSE:COP) (Houston, Texas) is planning 74 future capital spending projects representing over $1.8 billion in capital expenditures.

Click on the image at right to view the ConocoPhillips Major Capital Projects by Refinery Table.

The majority of these projects deal with unit modifications and additions to comply with low sulfur fuels mandates, such as a planned diesel hydrotreater addition (PEC 01009416) at the company's Sweeny refinery (Plant 1012987) located in Texas. The company is also looking at a slew of other expansions and modifications, such as an ongoing $40 million NOx reduction program (PEC 01009384).

To obtain a listing of these projects contact Industrialinfo.com's Member Center or see Industrialinfo.com's Petroleum Refinery Database Capital Project Tracking.