2009 Capital
Total capital requirements for 2009 have been budgeted at $50MM, with approximately $45MM allocated for maintenance capital, including refurbishing and catalyst replacement of the hydrocracker unit and $5MM allocated for discretionary projects, as well as other projects designed to reduce costs (or have other positive margin impacts) or improve throughput.
In 2008, a Visbreaker expansion project (approved in 2007) was commissioned. This project enabled greater Visbreaker throughput, higher conversion and longer operating cycle times. The capital estimate for this expansion was approximately $27 million; $10 million of which was incremental to work already planned on the visbreaker. The visbreaker project effectively upgraded approximately 1,500 BPD of HSFO into higher value distillate products.
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.