Capital expenditures for our Downstream business will be $120 million during 2012. The Downstream spending for 2012 is significantly less than 2011 as we completed a considerable turnaround and maintenance project during 2011 and there is no scheduled downtime unril 2013.
Within the Downstream budget, approximately 50% is allocated for Debottleneck projects involving low cast and simple debottlenecking of existing process units to enhance distillate yields, improve opearting costs, energy efficiency and operating reliability. We have also budgeted ~25% for mandatory throughput to average 106,000 bbl/d, with operating costs and purchased energy costs aggregating to ~$7.00/bbl.
Longer Term Growth Opportunities
The primary focus in past capital cycles at the North Atlantic refinery was to address EH&S and reliability issues, coupled with some debottlenecking and energy improvements. Therefore, there have been a number of highly economic capital programs that have been identified but not yet executed.
In the first half of 2008, a third party global engineering firm has completed an analysis of previous studies completed by refinery engineers and has generally validated the earlier conclusions regarding technical feasibility and preliminary design of major reconfiguration opportunities. The expansion recommended in the report is a capital investment estimated at about $2 billion.
This reconfiguration project would incorporate three major elements:
- Expand crude oil capacity from 115,000 bpd to 190,000 bpd
- 150k bpd of 100% Maya or 190k bpd of Maya / Basrah mix
- Convert to process heavier and more sour crude oils
- $8-$10/bbl feedstock savings (historical discounts to $115/bbl WTI)
- Upgrade 100% of HSFO into ULSD
- $60/bbl margin uplift based on 2008 YTD spreads
And would take approximately 5-years to completion and commissioning.
Economic analyses indicate the projected return on investment and other financial metrics are compelling. Next steps will include a thorough review of the extensive data and information provided by the engineering firm, selection of general project design for more extensive study and engineering, expansion of our evaluation beyond the technical and operational issues into options for project structure and financing, and then identifying potential partnering candidates who may be interested in participating in such an investment opportunity.