US-based refiner HollyFrontier says it will expand capacity by 45% at its 31,000 bpd refinery in Woods Cross, Utah, reaching 45,000 bpd by the expected completion in late 2014.
The expansion scope includes the relocation and revamp of crude, fluid catalytic cracking, and polymerization units from a subsidiary of Western Refinings Bloomfield refinery in New Mexico to Woods Cross, as well an expansion of the Woods Cross diesel hydrotreater and investment in associated utilities and offsites.
HollyFrontier has signed a definitive agreement for the purchase of the Bloomfield units with Western Refining, it said.
The company expects incremental yields from the expansion project to be approximately 60% gasoline and 40% diesel, with expansion costs approximately $225 million.
The company also expects that this expansion will have a payback period of less than two years, it said.
In conjunction with the expansion, HollyFrontier said it signed a 10-year, 20,000 bpd crude oil supply agreement with Newfield Exploration Co.
This agreement, which commences upon completion of the expansion, will supply black and yellow wax crude oil produced in the nearby Uinta Basin region to the Woods Cross refinery, which currently has capacity to process approximately 10,000 bpd of these crudes.
Upon completion of this expansion, the Woods Cross refinery will be able to process approximately 24,000 bpd of waxy Utah crudes, according to the company.
This expansion and crude oil supply agreement, and expected completion timeline, are subject to HollyFrontier successfully obtaining the necessary permits and regulatory approvals.
"The project to expand our Woods Cross refinery supported by the Newfield supply agreement will allow us to significantly increase earnings and production from Woods Cross, said Mike Jennings, CEO of HollyFrontier.
We are excited to be expanding our relationship with Newfield around this growing regional crude source, he continued.
With the recent startup of the UNEV pipeline, we will have the option to market additional products from this expansion to Cedar City, Utah and Las Vegas, as well as to our traditional customers in Salt Lake City and the Inter-Mountain West.