ConocoPhillips is seeking potential buyers for some of its downstream assets. However, given the current tentative refining environment, management said that it is unlikely to finalize any such deal in the next couple of years.

The company is not only in talks with the large integrateds but also several independent refiners for potential deals. In an effort to better focus on its exploration and production (E&P) activity, Conoco intends to cut down its refinery capacity to 2.0–2.2 million barrels a day (MMBbls/d) in 2012 from 2.7 MMBbls/d at the end of 2009.

In keeping with its restructuring initiatives, Conoco intends to sell $10 billion of assets in 2010 and 2011. As part of that effort, the company will sell its stake in a Canadian oil sands project for $4.65 billion. Conoco has also started initiatives to offload half of its 20% stake in LUKOIL, a major Russian integrated oil and gas company.

Despite these divestitures, the company anticipates per share production growth of 3% in both 2010 and 2011 on the back of its drilling initiatives. With leading positions in both natural gas and heavy crude oil in North America, a legacy position in the North Sea and growing exposure to lucrative international regions, ConocoPhillips expects to replace reserves and sustain production growth over the long term.

Conoco is increasing capital for exploration as the company is focusing on organic reserve replacement. Apart from a continuous drilling program at Kronos well in the Browse Basin, off the northwest coast of Australia, the company expects to bring more exploratory wells online later this year.

AMERICAS

U.S.

Tesoro Considers Changes at its Hawaii Refinery

Tesoro Corp. is making progress in a review of its Hawaii refinery operations that it announced in March.

The company, on a conference call with analysts, said a lot of effort was going into determining how it could improve profitability of the facility on a regular basis.

Bruce Smith, who retired as Tesoro's chief executive officer on April 30, said the company thinks it can unlock additional value at the refinery.

"I think it's sort of multi-functional," said Smith, according to a transcript of the call. "And I think we'll end up being successful in coming back to describe some of the things that we've been able to do."

Tesoro has looked at ways to improve returns from the Campbell Industrial Park refinery, which is one of the least profitable of the seven refineries it owns.

It previously said it might shutter refinery operations and maintain the facility as a distribution terminal.

Tesoro also has looked at refining biofuel at the Hawaii facility.

Tesoro to Shut Anacortes Refinery at least through Q2

All production operations at Tesoro Corp.'s (TSO) refinery at Anacortes, Washington will remain shut at least through the second quarter in response to a deadly blast April 2, the company said April 30

The cause of the fire is still unknown and is the subject of federal and state probes.

The explosion, which took place at the heat exchangers of a naphtha hydrotreater, killed seven workers in the deadliest blast at a U.S. refinery in five years. The blaze was isolated to that area of the refinery but the company decided to shut the entire plant until progress was made in various investigations and repairs could be completed.

"No one's ever adequately prepared to manage [a] crisis like this one but I am extremely proud" of the refinery team's response, said Bruce Smith, who is retiring as chief executive of Tesoro after 18 years at the company.

He said that it is too early to tell what has been the financial impact from the accident, but "we believe we have adequate insurance coverage including property and business interruption insurance." Smith said that Tesoro's business interruption deductible is 60 days and that there was a $25 million loss, related primarily to the operating plan that existed prior to the incident. The property deductible is $10 million.

"In light of the investigations which are still taking place, we're not going to speculate about any matter associated with this event," Smith said.

The book value of the Anacortes refinery is in the $500 million range.

All processing units at the Anacortes refinery, located about 70 miles north of Seattle, were shut and will remain offline for the rest of the quarter.

Product from the refinery was diverted to Tesoro's other refineries and the company has been supplying its transportation fuel customers with product from third parties. Crude cargoes intended for Anacortes are being routed to other plants as well.

Tesoro is the U.S.'s third-largest independent refiner with the capacity to process 665,000 barrels of crude oil a day across seven refineries in the Western region of the country.

The company expects to process between 465,000 barrels and 510,000 barrels a day in the second quarter, up from an average of 471,000 barrels in the prior quarter. First quarter production was affected by turnarounds.

Opponents of California Global Warming Law Turn In Signatures for Campaign

Setting up what is expected to be a multimillion-dollar political battle between Texas oil companies and Silicon Valley tech leaders, opponents of California's landmark global warming law, AB 32, turned in an estimated 800,000 signatures May 3 for a November ballot measure to suspend the law.

The campaign needs 433,931 valid signatures of registered California voters to qualify the initiative. Elections officials have until June 24 to certify the measure.

AB 32 was signed by Gov. Arnold Schwarzenegger in September 2006. The law requires that by 2020, California's emissions of carbon dioxide and other greenhouse be reduced to 1990 levels, a drop of about 25 percent. Its main provisions take effect January 1, 2012.

If approved by a simple majority of state voters on November 2, the measure would suspend AB 32 until California has four consecutive quarters where the unemployment rate is lower than 5.5 percent.

Supporters of the ballot measure said May 3 that the law will harm California's economy.

"The primary reason I'm here is because of economic costs. AB 32 is going to significantly exacerbate our energy bills," said James Duran, chairman of the Hispanic Chamber of Commerce of Silicon Valley.

Duran, whose organization represents 400 businesses, said he is concerned that higher gasoline and PG&E bills will most harm Latino residents, who as a group have lower incomes than the state as a whole.

Supporters of the campaign include the California Republican Party, Howard Jarvis Taxpayers Association, and the California Manufacturers & Technology Association. Major funding so far has come from two oil companies, Valero and Tesoro, both with operations in California and headquarters in Texas.

Technology leaders said they will fight the measure, and expect large Silicon Valley firms to contribute to efforts to defeat it.

"We and our membership will vigorously oppose efforts by out of state Texas oil companies to weaken our economy and gut our environmental laws for their own profit," said Carl Guardino, CEO of the Silicon Valley Leadership Group, which represents major tech companies.

Among the opponents so far of the measure are Google, Applied Materials, Solaria, Serious Materials, the Sierra Club and the League of Women Voters.

Guardino said the global warming law is driving demand for clean technology and renewable energy, which helps Silicon Valley companies.

"The data is clear," he said. "From 1995 to 2008, California jobs grew by 13 percent while clean and green jobs in California grew by 36 percent."

Duran said that not everyone benefits from those jobs.

"There will be a few," he said. "But there are only so many jobs installing solar panels."

Duran said he "agrees with the goals of AB 32 in concept" but with the state's unemployment rate at 12 percent, now is the wrong time to increase regulations.

Guardino countered that when Silicon Valley tech workers are doing well, the money trickles across the whole economy.

"AB 32 not only benefits jobs in the clean and green space, but all of the ancillary jobs running from retail to restaurants," he said. "When people have jobs, they use those salaries to live their lives."

U.S. Gulf Coast Refining not Disrupted by Oil Spill

U.S. Gulf Coast refineries said they were still operating normally on May 3 as the massive oil spill off the coast of Louisiana has not disrupted crude supplies.

The spread of the huge oil spill, caused two weeks previously after a BP drilling rig exploded and ruptured a well, has been gushing more than 5,000 barrels of oil per day, creating fears it could disrupt shipping delays in a region home to about 40 percent of U.S. refining capacity.

A delay in vessel traffic, particularly the tankers delivering crude into the Louisiana Offshore Oil Port, could force refiners to cut back on the crude processed.

The port, the only U.S. deepwater facility in the U.S., handles about 1 million and 1.5 million barrels per day in foreign and domestic crude from tankers and pipelines.

The LOOP is located well west of the oil leak, traders said.

While three natural gas oil production platforms in the Gulf of Mexico have been shut as a precaution, offshore oil fields in the Gulf, which account for about a quarter of U.S. crude production, have not been affected.

"Most marine imports into the New Orleans/Baton Rouge refining zone come in through the LOOP, with other major supply by pipelines in from the offshore producing platforms - and those pipelines shouldn't be affected by the mess on the surface," said one trader.

Chevron Corp's 330,000 bpd refinery in Pascagoula, Mississippi refinery is closest in proximity to the spill but has not felt any impact to operations.

"At this time, our operations have not been affected," said Chevron spokeswoman Margaret Cooper.

Murphy Oil, Valero Energy Corp , Exxon Mobil Corp. and Motiva Enterprises, which have refineries possibly at risk from the spill, said they didn't expect any disruptions at this time.

Shell said to date the only impact on either upstream or downstream operations had been a brief shut-in of its Na Kika pipeline, which has since returned to production but that it continues to monitor operations.

"In regards to refinery operations, we are closely following the situation, including trajectory and quantity of oil released to determine any potential impact on our operations," said a spokesman for the company.

Motiva Enterprises LLC, a joint venture between Shell and Saudi Aramco, operates three refineries -- two in Louisiana.

"At this time, we don't expect any disruptions to supply or production at our Gulf Coast refineries as a result of the oil spill," said Bill Day, a spokesman for Valero, the nation's largest independent refiner, which owns the 185,000 bpd in Norco, Louisiana.

Washington State Levies $69,200 in Fines for BP Cherry Point Violations

The BP Cherry Point refinery has been fined $69,200 for 13 safety violations that the Washington Department of Labor and Industries has labeled "serious."

BP Cherry Point is the largest refinery in Washington, processing 225,000 barrels of crude oil per day.

In a press release, Labor and Industries said its inspection focused on the hydrocracker process unit, which refines low-grade oil into gasoline. Twelve of the violations involve regulations governing the management of highly hazardous chemicals. One of the violations involves a failure to provide proper machine guarding.

The 12 process safety management problems included failure to routinely inspect or maintain safety control devices, such as pressure safety valves; inaccurate or outdated instrument diagrams; and failure to record whether identified safety hazards were corrected. One violation noted that there were 38 instances of safety recommendations for which there was no record they were ever implemented.

"The safety violations our inspectors uncovered at BP were problems similar to those we've uncovered in all of the refineries we have inspected in Washington," Michael Silverstein, assistant director for L&I's Division of Occupational Safety and Health, said in a press release. "Petroleum refineries are inherently risky work environments, and following the safety regulations is the key to preventing explosions and other life-threatening events."

BP has 15 days to appeal the latest fines.

Company spokesman Bill Kidd said officials have not had time to review the L&I citations but said his company wants to work with regulators to maintain and improve safety.

"We take the responsibility for the safety of our employees and our neighbors very seriously," Kidd said. "It's our top priority. ... While we're proud of our track record, there's always room for improvement."

The inspections leading to the fines began in November, months before the April explosion and fire at the Tesoro refinery in Anacortes that killed seven workers. The inspections were part of a statewide emphasis on refinery safety that began in 2007 as a response to a federal initiative. Regulators mounted that initiative after a number of refinery mishaps, the worst of which was a 2005 explosion at a BP refinery in Texas that killed 15 workers.

After the Texas disaster, BP convened an elite panel to report on safety practices at all of its refineries. The report generally gave the Cherry Point refinery high marks for safety precautions.

In 2005, a worker employed by a refinery maintenance firm died after he fell from a scaffold inside a refining tower at the Cherry Point refinery. Both BP and the contracting firm were fined for safety violations after that incident.

Alon Expects Big West to Reopen Within a Year

Big West refinery is expected to resume operations within a year even if that means bringing in feedstock from Los Angeles County by truck or rail, according to the company working to finalize a purchase of the plant.

Ideally the company, Alon USA Energy Inc., would use an existing but idled pipeline to transport gas oil from a refinery it owns down south. But Alon's CEO said in an earnings conference May 7 that securing permission to use the pipeline could take more than a year, and so the company has secured trucking and rail contracts in order to supply the plant in the meantime.

CEO Jeff Morris emphasized that the 12-month estimate was on the long side.

"We believe that (one-year) is conservative, but we're trying to be conservative with this," he said in the conference call.

Union official Ed Huhn said he hopes to see Big West start refining well before that.

"If it were going to be as long as a year, that wouldn't be very encouraging," Huhn said, adding that he hopes Alon will begin hiring in the meantime.

Alon, the Dallas-based subsidiary of an Israeli refining and fuel retailing company, emerged the winning bidder earlier this year when the refinery's Utah-based owner, Flying J Inc., put the plant up for auction amid its bankruptcy proceedings. Alon hoped to finalize the purchase by June 1.

Bakersfield fuel executive Henry Medina said the company's entry into the local market could heighten competition and drive down gasoline and diesel prices.

Sunoco, Shell, Chevron Boast GHG Emission Cuts

Sunoco, Shell and Chevron report reductions in greenhouse gas (GHG) emissions for 2009, part of the declines can be attributed to lower production demand.

Sunoco has reduced its greenhouse gas (GHG) emissions at its refineries and chemical plants by more than 19 percent since 1990, according to the company’s 2009 Corporate Responsibility Report. Refinery GHG emissions dropped by 15 percent and GHG emissions from chemical plants fell by nearly 12 percent in 2009, compared to 2008. The company attributes the reductions to improved greenhouse gas inventories and calculation factors for electricity.

When normalized on a “per barrel” of throughput basis, GHG emissions decreased at Sunoco’s refineries by 4.1 percent from 2008, and were 9.6 percent lower than 1990. Chemical plant emissions — per pound of production — increased 25.6 percent when compared with 2008, and increased 9.1 percent over 1990 levels. The company says production levels decreased 29.8 percent versus 2008 and 40.5 percent versus the baseline.

The oil company’s refineries and chemical plants also have reduced air exceedances by more than 20 percent, compared to 2008, through investments in emissions control technology and other plant modifications.

Sunoco reports that energy consumption decreased by 11.4 percent at its refineries and chemical plants in 2009, compared to 2008. However, production decreased in 2009 by 11.7 percent at the refineries and by 29.8 percent at the chemical plants, when compared with 2008.

Similarly, Chevron touts its GHG emission cuts. In 2009, the oil company reduced its emissions by approximately 2.2 million metric tons of CO2 equivalent. Chevron also reduced GHG emissions from flaring by eight percent in 2009, compared to 2008, and advanced projects that will continue to reduce GHG emissions from flaring in Angola, Kazakhstan and Nigeria, according to the company’s 2009 Corporate Responsibility Report (PDF).

Chevron estimates that combustion of its products resulted in emissions of approximately 410 million metric tons of carbon dioxide in 2009, approximately 7 percent more than the 382 million metric tons in 2008.

Chevron has increased its own energy efficiency by 30 percent since 1992.

In 2009, Chevron approved the $37 billion Gorgon natural gas project off the northwest coast of Australia, the largest energy project in the company’s history. To reduce carbon emissions, the project plans to capture and reinject carbon dioxide (CO2) from natural gas production. This project will inject four times more CO2 than any other project, according to the report.

In the area of renewable energy, Chevron Energy Solutions (CES) has several projects in the United States to improve energy efficiency and install renewable power technologies at schools, federal facilities and Chevron facilities.

In 2010, Chevron is adding a solar system to power the pumps and pipelines at its Kern River oil field facility and is planning a 1 megawatt concentrating photovoltaic solar facility at a molybdenum nine in New Mexico.

Shell also reports lower GHG emissions for 2009. The energy company’s direct GHG emissions from facilities it operates were 67 million tonnes on a CO2-equivalent basis in 2009, 11 percent lower than in 2008 and around 35 percent below 1990 levels, according to the company’s Sustainability Report for 2009 (PDF). The company attributes the decline to several factors including improved operational performance, lower demand for its products due to the economic downturn, some shut-in production in Nigeria and the sale of some facilities.

The company’s total GHG emissions in 2009, around 11 percent came from the flaring of gas in its upstream business. Some was operational flaring for safety reasons and during the start-up of facilities, but the company said it is working to reduce operational flaring.

The company expects that natural gas will be more than 50 percent of its energy output by about 2012. This is expected to reduce CO2 emissions since it produces up to 70 percent less CO2 than coal when used to generate the same amount of electricity.

Lower-carbon biofuels also will become a greater part of Shell’s efforts to reduce CO2 from the transport fuels mix. In 2009, Shell made investments in developing advanced fuels and lubricants as well as improving its technologies to reduce emissions. Over the past five years, the company has spent $2 billion on carbon capture and storage (CCS) and alternative energies, including biofuels.

Shell is also participating in several CCS projects including the Gorgon liquefied natural gas project in Australia, of which it holds a 25 percent interest, and the Mongstad, Norway project, which is expected to capture up to 100,000 tonnes of CO2 a year from 2011. Other CCS projects include Shell’s proposed Quest project in Canada and the Barendrecht CCS project in the Netherlands.

Holly Corp to Run Plants at Top Capacity during Q2

Holly Corp., owner of refineries and pipelines in the Southwest, expects to run its three plants close to their maximum rates during the second quarter, Matthew Clifton, the company's chief executive officer, said May 6.

Among them are Holly's refinery in Woods Cross, which will be "maxed out" and run at slightly less than 30,000 barrels a day, he said.

Holly plans to run its refinery in Tulsa, Okla., at about 120,000 barrels a day during May and the second quarter, he said. The plant's operating rate was about 115,000 barrels a day during April. The Tulsa plant will also process Canadian crude that will be blended with other oils to make asphalt, Clifton said.

The Navajo refinery in Artesia, N.M., will process in the "low" 90,000-barrel-a-day range, Clifton said.

U.S. Refinery Status Unplanned and Planned: Valero Houston Reports Compressor Trip

The following table lists unplanned and planned production outages at U.S. refineries as reported by Dow Jones Newswires. The information is compiled from both official and unofficial refining sources and doesn’t purport to be a comprehensive list.

Valero Energy Corp’s (VLO) refinery in Houston, Texas, reported that a gas compressor tripped offline briefly May 1 related to a crude-processing unit, according to filing with state environmental regulators.

The damage at Valero’s Memphis refinery was relatively minor after a fire broke out at a sulfur-extraction unit April 29, but a worker was in serious condition at a local hospital’s burn unit, a company spokesman said.

ConocoPhillips (COP) said an isolated fire that broke out at its Wood River refinery in Roxana, Ill., April 29 was safely extinguished and resulted in no injuries. It took place at the S-Zorb sulfur treating unit and the unit is being investigated.

Operator Refinery Capacity Description Restart

(in 000s

bbl/day)

UNPLANNED

GULF COAST

Exxon Baton Rouge 503.0 Three workers injured in a fire

La. on April 14. Fire was "brief" and

occurred at a gas compressor, but

general operations were not affected,

Co. said April 15.

Exxon Beaumont 344.5 Reported crack in coke drum

TX April 24.

Motiva Port Arthur 285.0 Contract worker dies on 4/19;

TX the cause is under investi-

gation.

Restarted delayed coking unit

on April 11 after experiencing a

wet gas compressor trip, a filing

stated.

Valero Houston 145.0 SAT gas compressor tripped offline

TX May 1 related to a crude unit, and

was restated as quickly as possible.

MIDWEST

Conoco Wood River 306.0 Fire broke out at S-Zorb sulfur

IL treating unit April 29; there

were no injuries and the unit

is being investigated.

ROCKY MOUNTAINS

WEST COAST

Chevron El Segundo 279.0 Isomax plant shut March 19 n/a

CA due to "small" fire. No

estimate on restart.

Tesoro Wilmington 100.0 Hydrocracker Unit Shut April 5.

Tesoro Anacortes 120.0 Fire at naphtha unit April 2

WA killed seven.

All production operations to

temporarily shut down later this

month until repairs are done and

investigations progress, company said

April 12. Supply will be met from

other companies’ refineries or from

spot market. Plant was processing

70,000 b/d if crude after blast.

Plant will be shut through 2Q,

Co. said April 30.

Exxon Torrance, CA 150.0 Hydrocracker - 20,500 b/d - was

shut April 28 after a compressor

went offline, Co. said April 29.

Impact unclear.

PLANNED

CANADA

Shell Montreal 130.0 The refinery will be converted

Quebec into a fuel terminal, Co. said

Jan. 7. No timeline provided.

CARIBBEAN

Valero Aruba 235.0 The plant, which

was shut in June for 2-3

months for economic reasons was

closed indefinitely in Nov.

EAST COAST

Hess Port Month-long turnaround work

Reading NJ will take place in April at

the plant’s 70,000-b/d

FCCU; the refinery does not

process crude oil.

Sunoco Westville 145.0 Idling all Eagle Point refin- n/a

NJ ing operations indefinitely due

to poor economics, Co. said

Oct. 6.

Valero Delaware 210.0 PBF Investments has reached deal April 2012

to buy plant. Could be fully operational

by April 2012.

Western Yorktown 64.5 Planned work scheduled 3Q 2010. Q3 2010

GULF COAST

Alon Krotz 100.0 Refinery will restart in

Springs, La. April.

BP Texas City 455.8 Planned work began at an FCC

vessel April 23.

Chevron Pascagoula 330.0 Pre-commercial heavy oil 2010

Miss. conversion project delayed

from 2008 to 2010 due to

economic factors.

Work is progressing on the

continuous catalytic reformer,

expected to be completed by

mid-2010, Co. said Feb. 25.

Co. is planning to put a premium

base-oil facility at plant.

Flint Corpus $250 mln project for new Spring 2010

Hills Christi, TX diesel desulfurization,

sulfur recovery unit to begin

in Fall 2008. Construction

to last 18 months.

Maintenance at one of three May 3

compressors at the flare gas

recovery unit on April 26-May 3

Marathon Garyville 436.0 Plant operating at newly ex- n/a

LA panded capacity and may ex-

ceed it, the co. said on March

25.

Motiva Convent, LA 235.0 Planned turnaround maintenance Early

began Jan 28 at several un- April

specified process units. Re-

start seen in early April.

Motiva Port Arthur 285.0 Expansion project to increase 1Q

TX throughput capacity by 325,000 2012

b/d, to 610,000-b/d, slowed.

Completion now seen 1Q

2012, from 2010.

Valero Corpus 340.0 Plant shut; West Plant n/a

Christi, TX 50,000-b/d FCCU at reduced

rates since mid-Dec for

economic reasons.

36,000-b/d HCU in West Plant March

restarted, Co. said March 16,

after about 18 days of work

delayed from Feb.

Planned work on SMR unit began

at West Plant on April 12.

Reported restart of equipment

after maintenance at West Plant’s

Complex 1 and 3 on April 15.

Emissions at East Plant April 24

related to Complex 7 fuel gas

system; co. changed a part at

the unit’s scrubber.

Valero Norco, LA 250.0 Upgrade project to build 2012

a new diesel hydrotreater

unit moved from 2010 to

4Q 2012.

Valero Port Arthur 325.0 Hydrocracker turnaround lasting

38 days has begun, Co. said

March 15. Returned to planned

rates, co said April 26.

77,000-b/d FCCU at reduced n/a

rates since mid-Dec for

economic reasons.

Valero Memphis, TN 195.0 Fire erupted at a selective

hydrogenation unit April 29;

it was quickly extinguished

and one worker in serious

condition due to burns.

Fire damage was relatively

minor and any delay to related

FCCU would be minimal, Co. said

April 30. Entire plant is in a

turnaround.

Valero Sunray, TX 170.0 55,000-b/d FCCU at reduced n/a

rates since mid-Dec for

economic reasons.

FCCU was at planned rates

Co. said April 23. Unit was

expected to take place on

April 18-24, a filing prior

to the start date said.

MIDWEST

BP Toledo, OH 155.0 $400 million upgrade 2012

to start 2010.

Valero Memphis, TN 195.0 Crude unit restarted, while end-

overhaul of FCCU and alky- April

lation unit continues, the

company said March 26.

The entire plant had been

off-line since March 14.

Marathon Catlettsburg 226.0 Units being restarted after

KY completing turnaround

Plant-wide, Co. April 21.

Work began early March.

ROCKY MOUNTAIN

Suncor Commerce 93.0 No. 1 Crude unit will shut for Mar 22

City, CO planned maintenance on Mar 6;

restart Mar 22.

Cryo Unit will shut for planned Apr 4

maintenance Mar 20; restart

April 4.

Planned work at reformer unit Fall

deferred to Fall 2010 from Feb 2010

28 start date.

Tesoro Mandan, N.D. 60.0 Plant being shut April 16 for Late May

30-day turnaround maintenance

beginning April 19, a state

environmental official said

April 16. Co. said April 16

it started on schedule and

will continue till late May.

WEST COAST

Exxon Torrance, CA 150.0 Planned flaring activity to take

place April 18-30. It is related

to turnaround maintenance since

March, Co. said April 16.

BP Carson, CA 265.0 Planned flaring activity on

March 29-April 20 and, Co. reported

in filings.

Planned flaring activity reported

for April 23-May 7, an April 22

filing said.

Conoco Wilmington 139.0 Scheduled maintenance activity

CA has begun, Co. said April 23. Co.

declined to provide details about

the units involved or the schedule.

Traders familiar with operations

said work includes a

hydrotreater.

Tesoro Golden Eagle 166.0 Turnaround work began in early n/a

Martinez, Dec at FCCU and alkylation

CA unit, the Co. said on Feb 3.

Restart timing unclear.

Other major turnaround mainte- 2011

nance deferred to 2011 from

late 2009, the Co. said Feb 3.

Tesoro Oahu, HI 94.0 Planned turnaround work will

Kapolei begin 3Q, 2010, the Co. said

on Feb 3.

Planned work deferred to 2011 from

late 2009, the Co. said Feb 3.

Chevron El Segundo 279.0 Reported flaring and cause was being

CA investigated, an April 9 filing said.

ConocoPhillips Plans $50 Mln Coker Upgrade at Billings Refinery

In late July, ConocoPhillips will begin a $50 million upgrade to its Montana refinery.

Steve Steach, manager of the Billings refinery, said May 13 that the project involves replacing the two cylindrical drums that are part of a $150 million coker, which was completed in 1992. Each new drum is 100 feet long and 24 feet in diameter and weighs 300 tons.

In a related development, ConocoPhillips is moving about five people to Billings as the company focuses on production in the Bakken oil field in North Dakota and Montana.

Moving the coke drums from Japan, where they are being fabricated, to Billings requires a complicated permitting system and careful planning. As part of the project, CononcoPhillips must temporarily relocate 800 power lines to accommodate the heavy transport vehicles.

The steel drums are an integral part of the coker, a unit that applies heat and pressure to heavier, less valuable components of crude oil, converting them into more useful products such as gasoline, diesel and jet fuel. The coker unit was completed in 1992, one of a series of investments that have been made in the three Billings-area oil refineries.

The upgrade to the Billings coker will be completed early next year. But ConocoPhillips has placed on hold plans to install a $500 million refining unit designed to handle heavier crude oil, Steach told the Big Sky Economic Development Authority's board of commissioners.

ConocoPhillips Chief Executive Jim Mulva mentioned the large-scale refinery upgrade during a visit to Billings in 2006. However, those plans have since been shelved. Last fall, ConocoPhillips announced a plan to dispose of $10 billion in its less-profitable assets over two years. As part of that plan, ConocoPhillips agreed to sell its interest in Syncrude, a joint venture developing the tar sands in northern Canada. Sinopec, a Chinese oil producing firm, is paying $4.65 billion for the ConocoPhillips stake in Syncrude.

Steach said ConocoPhillips has a long-term goal of investing more in the more profitable "upstream" sector, which involves exploration and production of oil and gas. By comparison, refinery operations are less profitable.

Some analysts have speculated that ConocoPhillips may be interested in selling some of its refineries as part of its restructuring plan. While the Billings operation is the smallest of the company's 16 refineries, it is also profitable and represents a strategic asset. "I'm not worried about the Billings refinery" being sold, Steach said.

ConocoPhillips reported $2.1 billion in first-quarter profits, up from $800 million for the same period in 2009, in part because of improving oil prices.

The company reported that it spudded three wells in the Bakken shale play during March, and three more wells were placed into production.

Concerns Raised about Future of Yorktown Refinery

Investors of the Yorktown Refinery’s parent company Western Refining are concerned about the future of the refinery. For the last six months it has struggled to turn a profit.

The discussion took place during a conference call to discuss Western's first quarter results. Although the news was better than the previous quarter, the financials were still bleak.

Western reported a first quarter loss of $30.7 million, an improvement from a $51.1 million loss in the fourth quarter of 2009.

The Yorktown refinery's profit margins also improved in the first quarter, but not enough to cover costs. The refinery made $2.80 per barrel against operating expenses of $4.54.

By contrast, Western's refineries in Texas and New Mexico posted first quarter profit margins of $6.91 and $15.27 versus direct operating expenses of $3.77 and $7.54 respectively.

Jeff Stevens, president of Western Refining, said demand for crude oil and petroleum products dropped, effectively squeezing profit margins.

"If the heavy to light [crude oil] differentials continues to trend the way we think they should, we believe it will be profitable," he said of the Yorktown refinery.

Stevens said Yorktown was in a good position based on its location and its ability to make "unique crudes."

"We're trying to do things at that facility to ensure it is one of the survivors," he said. "We have to watch and monitor to see how everything plays out."

Refineries are considered sacrosanct for their sophisticated cracking of crude oil into gasoline and diesel, but they are still vulnerable to closing. Last November, Western announced it would be closing its refinery in Bloomfield, N.M., to save $25 million a year, in part by eliminating 100 jobs. To compensate, Western increased production at its nearby Gallup refinery.

Meanwhile, Western is deferring upgrades to Yorktown to save money. The company canceled plans to overhaul a crude oil unit, saving around $20 million. Plans to upgrade a coker unit were shifted to early 2011. That project will cost around $10 million.

Investors questioned whether it was safe putting off the upgrades. The Yorktown refinery was the site of four fires between 2001 and 2006 from ignition in various processing units.

Stevens said maintenance work has been done on the crude unit three times in the last three years. "We're confident in where the unit's at," he said.

Talk of savings at the refinery didn't ease investors' minds as they continued to ask questions about the future of Yorktown.

"It's going to be demand-driven, and how the economy comes back on the East Coast," Stevens replied. "We're cautiously optimistic."

The Yorktown refinery has been in operation since 1956 and is one of the county's largest taxpayers. The refinery has around 260 employees.

Noel described the refinery as a good corporate citizen, noting that the refinery donated about 500 acres that included wetlands for conservation.

The Yorktown refinery has changed hands several times in recent years beginning in 2002 when BP sold the refinery to Giant Industries. Then in 2007 Giant Merged with Western.

In 2008, Western announced it was putting the Yorktown refinery up for sale but later decided to take it off the market.

Noel acknowledged that the refining industry has been struggling in recent years.

"They've been put in a very difficult economic paradigm now," he said. "It's been challenging. They have to invest a lot just to maintain the facility. It's a very capital intensive industry."

Noel said that between 2008 and 2009 Western invested $175 million at the Yorktown refinery to expand some of the processes there.

He said that the state, as well as Dominion Virginia Power, and Virginia Natural gas have had meetings with the refinery to discuss possible assistance.

"When it gets to the order of magnitude of losses sometimes there's not a lot we can do," Noel said. "We want to do everything we can to keep them in place."

EPA Finalizes GHG Rules for Facilities

The Obama administration on May 13 finalized rules to curb greenhouse gas emissions from power plants, cement manufacturers, and other industrial facilities, in a move that will force companies to invest in new pollution-control equipment to fight climate change.

The U.S. Environmental Protection Agency said beginning in July 2011, any newly planned large facilities, defined as those releasing 100,000 or more tons of carbon dioxide a year will have to hold permits to emit greenhouse gases. Large facilities that undergo modifications that would increase emissions by 75,000 tons or more will be subject to permitting requirements earlier, beginning in January 2011.

The regulation still faces likely legal challenges on criticism that the EPA lacks the authority to distinguish between large and smaller emitters. Congress is separately seeking to overturn the rule, with Sen. Lisa Murkowski (R, Alaska), planning to arrange a Senate "disapproval resolution" vote by June 7, according to spokesman Robert Dillon. "I don't think any of the concerns she has about the regulation have changed," he said.

Limiting the concentration of greenhouse gases in the atmosphere is a cornerstone of the Obama administration's environmental agenda. EPA Administrator Lisa Jackson found last year that rising carbon-dioxide content in the atmosphere threatens more heavy downpours and flooding, more frequent and intense heat waves and rising sea levels. A 2007 Supreme Court decision had ordered the EPA to determine whether a public danger existed and come up with regulations if necessary.

Companies had fought against greenhouse-gas rules, citing the costs of new equipment and confusion surrounding what counts as the most up-to-date technology to control emissions.

"The approach could delay or cancel much-needed business investment," said Cal Dooley, the president of the American Chemistry Council, in a statement. He urged Congress, which has been tangled up over how to combat global warming, to pass legislation.

The EPA has said it plans to come up with guidance on the "best available control technology," but has been slowed by a battle between environmentalists and companies over how to proceed. The debate includes whether to treat natural gas as a control technology -- a step that would reshape U.S. industry and could steer the country away from coal -- or whether natural gas should give way to costlier but cleaner wind and solar projects.

"I wish I could tell you they were coming out next week," Gina McCarthy, the EPA's assistant administrator for air and radiation, told reporters on a conference call. "We still have a great deal of work to do on those."

Companies with pending applications must lock in approval from state permitting authorities before January 2, 2011, for modification plans in order to put off dealing with the new regulations. "This rule basically does not grandfather applications that are in the process," McCarthy said.

Last year, the EPA had proposed tailoring greenhouse-gas rules in a fashion that would apply the rules to many more kinds of sources, with facilities emitting as little as 25,000 tons subject to regulations. The agency backed off in the face of criticism that state permitting authorities would be overwhelmed with the volume of new permitting requests--including from never-before regulated entities such as large apartment buildings.

The EPA said that it plans to next year propose phasing in the rules to include facilities that release as little as 50,000 tons of greenhouse gases per year. By the end of 2015, the agency aims to complete a study on the effects of applying the regulations to even smaller sources. The study will provide the basis for completing another rule by April 2016. The agency said it may decide that some smaller sources need to be "permanently excluded" from greenhouse-gas regulations.

State regulators praised the EPA for giving states time to adjust.

"States are pleased that EPA is phasing in these requirements so that agencies have sufficient time to closely align their programs with the federal permitting rules, thereby assuring a smooth and rational transition to the daunting but important challenges of regulating greenhouse gases from these industrial facilities," said Bill Becker, the executive director of the National Association of Clean Air Agencies, in a statement.

Marathon Plans to Divest Its Minnesota St. Paul Park Refinery

Marathon Oil Corp. on May 19 announced that it has entered into a non-binding Letter of Intent with ACON Investments, LLC, NTR Partners LLC and TPG Capital, L.P. for the sale of most of Marathon's Minnesota downstream assets.

The assets include the 74,000 barrel per day St. Paul Park refinery and associated terminal, 166 SuperAmerica convenience stores along with SuperAmerica Franchising LLC, interests in pipeline assets in Minnesota a baked goods supply operation, and associated inventories. The estimated overall transaction value is expected to be in excess of $800 million, including inventories at current market values. Marathon may also receive additional contingent payments over a number of years.

Under the Letter of Intent, the investment group will have a period of exclusivity to work towards negotiation of definitive agreements. Marathon anticipates closing to occur within the late third or fourth quarter. The sale of these assets is subject to, among other things, conclusion of definitive agreements and Marathon board approval. Marathon would provide services to support the operation of the facilities during a transition period following a successful closing of this transaction.

This proposed sale is part of Marathon's ongoing efforts to ensure the Company's asset portfolio is strategically aligned with its business plans, while maintaining its position as one of the leading refining, marketing and transportation operations in the nation. Marathon expects to continue to be one of the largest suppliers of finished products in the Midwest and Southeast through its remaining refining, distribution and marketing system.

This transaction would not affect Marathon's Brand marketing operations in Minnesota. Marathon's financial advisor for this transaction is Morgan Stanley.

Feds Look at Emissions Regulations for Two more Texas Refineries

Two Corpus Christi refineries could be next for federal regulation of their air emission standards.

Flint Hills Resources West and Valero East refineries are among 40 Texas companies with pending permits the U.S. Environmental Protection Agency has objected to, asking the Texas Commission on Environmental Quality not to issue the air permits because they violate the federal Clean Air Act.

The companies say they comply with all applicable laws.

The EPA took over the operating permit of Flint Hills East on May 25 after issuing a letter to the company that said it was barring the TCEQ from issuing the permit. EPA Regional Administrator Al Armendariz said the same action was likely for the 39 other permits the EPA had objected to.

The move was unprecedented and came after months of talks between the EPA and the state to resolve a disagreement over the state’s flex permitting process.

The federal Clean Air Act requires refineries with multiple units to have a permit for each unit. Texas allows those refineries to operate under an umbrella permit known as a flex permit instead of requiring them to have a permit for each unit.

“We objected to that,” EPA spokesman David Bary said. “It’s never been federally approved.”

State regulators have disagreed with the EPA’s conclusion. They say the state’s permitting process has lowered state industry emissions, while the EPA says the process masks pollution and makes it impossible to regulate emissions.

Armendariz has said the EPA may take over the entire job of regulating air quality in Texas if the state keeps violating the federal Clean Air Act, according to an Associated Press report published Thursday.

Valero spokesman Bill Day said the company has six units in Texas that operate under a flex permit, which is being questioned by the EPA.

“Valero is hopeful that the EPA and TCEQ can resolve their dispute without affecting Texas jobs and the Texas economy, and do so quickly,” he said.

Flint Hills Resources spokeswoman Katie Stavinoha said May 27 the company was continuing to evaluate the letter to Flint Hills East.

“There’s absolutely no question about our compliance with our state existing permit,” she said of the two refineries in Corpus Christi.

ARGENTINA

Petrobras to Sell Refinery, Distribution Assets in Argentina for $110 Mln

Petrobras announced May 5 that its subsidiary Petrobras Energia S.A. has approved the terms and conditions of the sale of the refining and distribution assets in Argentina to Oil Combustibles S.A. The deal includes a refinery located in San Lorenzo, Santa Fe province; a river unit; and a fuel marketing network linked to the refinery, consisting of 360 service stations and their associated wholesale customers.

The offer for the mentioned assets was approximately $36 million. In addition, inventories of oil and of the different products will be sold to Oil Combustibles, on the closing date, for approximately $74 million. The total amount of the transaction is estimated at some $110 million.

The deadline for the completion of the sale was estimated at 90 days and is subject to the governmental approvals required by Argentina legislation.

The operation does not include the sale of the reformer unit that Petrobras Energia has in its Puerto General San Martín Petrochemical Complex.

CURACAO

Nynas’ Curacao Isla Refinery Start-up Expected Mid-May

The Isla refinery on the island of Curacao is shut down due to power supply problems resulting in repairs to the utility plant. Nynas stated May 4 that it is working under the assumption that the startup of the refinery will take place May 10-15.

Nynas reported that it is proactively working to solve the shortage of supply by producing Isla refinery products in its other refineries.

ASIA

AUSTRALIA

Indonesia Building $8-9 Bln Masela Floating Gas and Oil Refinery in Timor Sea

The Masela Gas and Oil Refinery being built in the Timor Sea will be the largest of its kind in the world, an Indonesian energy official said.

"The Upstream Oil and Gas Regulatory Body (BP Migas) is building the largest floating oil and gas refinery in the world. It is located in the Masela Block in the Timor Sea," said BP Migas Chief R Priyono in Batam, Riau Islands May 21.

The Masela refinery was being constructed with huge investment figures. Its platform would cost US$600-800 million and the refinery itself US$8-9 billion, he said.

The refinery would be operated by Inpex Masela Ltd with liquefied natural gas production to begin by 2016 at a rate of 4.5 million tons per year.

Priyono said the Masela block held gas reserves of 8.5 trillion cubic feet which were estimated to last up to 47 years.

The offshore refinery was being constructed using the integrated upstream pattern, starting from the gas well drilling to the floating LNG refinery.

Inpex is the Japanese company holding a 100 percent participating interest in the project.

The contract on development of the Masela Block was signed by the government and Inpex on November 16, 1998.

CHINA

Chinese Firms to Build and Operate New $2 Bln Refinery in Egypt

Egypt will build its biggest oil refinery with Chinese investment worth $2 billion to meet growing domestic demand and boost exports to the Asian country, the oil ministry said in May.

China's Rongsheng Holding Group and state-run China National Chemical Engineering Co. inked an agreement with the Egyptian oil ministry to build and operate the refinery, which will have an initial capacity of 15 million tons a year, the ministry said in a statement.

Additional capacity of 15 million tons a year will be added to the refinery's capacity at a later stage under an expansion plan. The refinery will also produce jet fuel and diesel for the domestic market and naphtha for export to China, the ministry said.

Under the terms of the contract, the two Chinese companies will operate the refinery for 25 years and then gradually transfer ownership to Egypt.

China Okays $8.8 Bln JV Refinery in Guangdong

China’s National Development and Reform Commission has granted preliminary approval to a joint venture refinery and petrochemical complex between China Petroleum & Chemical Corp. (SNP), known as Sinopec, and Kuwait Petroleum Corp. in southern China's Guangdong province.

The joint project has been planned for five years and was previously suspended due to environmental concerns. The proposed site has since been relocated from the densely populated Nansha district to the much-less-densely populated Zhanjiang city.

Total investment for the complex is estimated at US$8.8 billion (CNY60 billion), Sinopec president Su Shulin said May 18, adding that he thought this level of investment was too high. "I have suggested we do further optimization on the project" to cut costs, he said.

The two companies must submit the results of a feasibility study and an environmental impact assessment to the NDRC, China's top economic planning agency, before they can obtain final approval.

State-run KPC and Sinopec Corp. plan to start operations at the complex in 2013, with crude throughput capacity of 300,000 barrels a day and ethylene output capacity of 1 million tons a year. Kuwait will supply all the crude oil for the project.

Sinopec and KPC hold equal stakes in the project. KPC plans to sell 20% of its 50% stake to international partners, which it has been discussing with oil Anglo-Dutch oil major Royal Dutch Shell PLC (RDSB), U.S.-based Dow Chemical Co. (DOW), and the U.K.'s BP PLC (BP).

In December, Shell said it was no longer seeking to participate in the project.

Kuwait Petroleum International, which oversees KPC's international downstream marketing operations and represents Kuwait in talks with potential partners, has said it would finalize international partners only after the NDRC grants final approval for the project.

INDIA

India’s IOC, HPCL Say No To Rajasthan Refinery

State-owned Indian Oil Corp (IOC) and Hindustan Petroleum Corp (HPCL) have rejected an offer to build a refinery in Rajasthan and claim the project can be viable only if the state government picks up stake and offers huge fiscal incentives.

"IOC and HPCL have conveyed that at this juncture, their hands are full and they would not be in a position to participate in another project," said the S C Tripathi Committee, which was asked by the Rajasthan government to possibly set up a refinery in the state.

While IOC is building a 15 million tonne refinery at Paradip in Orissa, HPCL is constructing a 9 million tonne unit at Bhatinda in Punjab.

The panel suggested a 4.5-6 million tonne refinery can be set up at the site of a massive oil find by Cairn India (BSE:532792) at Barmer in Rajasthan provided the state government picked 26 per cent stake in the project and provided fiscal incentives.

The Committee said the unit can be expanded to 9-12 million tonnes in the future.

"Cairn India has already explained to the Committee that they would not be in a position to participate financially in a venture for setting up a refinery," it said.

The project would not be viable in a country that already has surplus refining capacity without fiscal incentives, the expert group said in its report submitted this month.

The Rajasthan government has been pressing for a refinery at Barmer after Cairn found 6.5 billion barrels of reserves that can produce up to 240,000 barrels per day (12 million tonnes a year) of oil at plateau.

Oil and Natural Gas Corp (ONGC), which owns a 30 percent stake in the Rajasthan fields, had proposed a refinery at Barmer in 2005. For it to take up the project, the company wants the state government to defer local sales tax or extend an interest free loan of Rs 1,300 crore per year for 16 years, give free land and water, exempt crude oil from entry tax and waive the central sales tax for 16 years.

SBI Caps, which also went into the viability of the project, also suggested an interest free loan of Rs 1,200 crore per year for 16 years to ONGC, the committee said.

IOC and HPCL, the report said, were willing to buy fuel produced by the refinery provided it is sold to them at 5 per cent discount.

"Rajasthan can also bear the liability of 5 per cent discount on the refinery price to be given to oil marketing company for the purpose of marketing tie-up by giving an equal amount of sale tax/VAT relief on a year to year basis," it said.

"Alternatively, this discount can be in the form of an interest free loan or grant," it said.

Jacobs Wins Contract for India’s CPCL $650 Mln DCU Project

Jacobs Engineering Group Inc. announced May 4 that it has received a contract from Chennai Petroleum Corporation Limited (CPCL) to provide project management consultancy (PMC) and engineering, procurement, construction management (EPCM) services for the Resid Upgradation Project of CPCL at their Manali facilities in Chennai, India. The project involves a delayed coker unit (DCU), a once through hydrocracker revamp, a sulfur recovery unit, a green field coke yard facility, and utilities.

Officials did not disclose the contract value. The total installed cost of the DCU is estimated at about US$650 million.

Chennai Petroleum is a group company of Indian Oil Corporation. Indian Oil Corporation Ltd. is currently India's largest company by sales. Indian Oil is also the highest ranked Indian company in the prestigious Fortune Magazine 'Global 500' listing.

Jacobs' scope of work includes process packages for the utility and offsite facilities, a detailed feasibility report, PMC services for execution of coker block and sulfur block and EPCM services for the balance of the project.

In making the announcement, Jacobs Group Vice President Chris Nagel stated, "We are delighted to work on this project for CPCL and assist them as they strive to satisfy their clients' expectations for high quality products."

INDONESIA

Libya Eyes Refinery Project in Indonesia

Libya's National Oil Corp (NOC) wants to take part in the development of an oil refinery in Bojonegara, Banten and expansion of the Balongan oil refinery in West Java.

"We want to invest in the two projects and hope to become a shareholder," NOC chairman Shukri Muhammed Ghanem said after a meeting with Energy and Mineral Resources Minister Darwin Zahedy Saleh.

Ghanem said his company also wants to become a supplier of crude oil for the two oil refineries, which will have processing capacity of 300,000 barrels of crude oil per day each.

Darwin said the government welcomes participation of NOC in the projects, adding Indonesia needs funds to implement the two projects.

Indonesia, a former member of OPEC, imports a substantial volume of crude oil to feed its oil refineries.

EUROPE / AFRICA / MIDDLE EAST

NIGERIA

Nigeria, China Strike $23 Bln, 3 Refinery Deal

Nigeria and China have signed a tentative deal to build three oil refineries in the West African state at a cost of $23 billion to boost badly needed gasoline supply in Nigeria and position China for more access to the country's coveted high-quality oil reserves.

"This is a deal we need for Nigeria to cut our reliance on imports," said a senior Nigerian oil official.

He said the Chinese commitment to build refineries in Nigeria--which has spent billions of dollars annually for years importing gasoline due to rickety refineries at home--would also help put China "in the running" for getting additional access to oil acreage in Nigeria, one of Africa's biggest crude producers and exporters.

"This is business but it builds goodwill in addition," the official said, adding there were still details to be settled before a final deal is concluded. Nigeria has seen other efforts in recent years to build refineries with foreign assistance fail to materialize.

Still, the Nigeria government's provisional deal represents a bragging right of sorts vis-à -vis U.S. and European oil companies, which have long turned a deaf ear to Nigerian government calls to operate refineries in the country because of the poor financial returns.

Nigerian gasoline and diesel prices are highly subsidized. This government benefit is one of the few that Nigerians, most of whom live in poverty, have seen over the years from their country's big crude reserves.

But the fuel subsidies mean Nigeria's refineries operate at little or no profit, a primary factor that has hurt new investment and upkeep at existing facilities. The subsidies have also encouraged a thriving black market for Nigerian gasoline and other fuel products in neighboring states like Benin that has helped cause shortages in Nigeria.

Various Western companies, such as Exxon Mobil Corp., refused to include funding for refineries as part of negotiations several months ago to re-sign expiring oil drilling leases in Nigeria, and still managed to keep those licenses, according to several people close to the matter.

But Nigeria's tough refining economics are an opportunity for the Chinese government, which is bent on procuring its state oil companies access to new oil reserves to fuel the country's speedy economic growth. Nigeria is looking to offer offshore oil fields to foreign companies but hasn't yet announced a date for any new licensing rounds.

Funding for the three refineries, each slated to pump 250,000 barrels a day of refined products, is expected to come from the China Export & Credit Insurance Corp. and a group of Chinese banks. The Nigerian official said he didn't have details on what sort of returns Chinese banks might see from their funding.

It's unclear if Nigeria would permit any gasoline or other fuel products from the three planned refineries to be exported after they satisfy domestic demand, something the country permits with its natural gas.

Nigeria's mostly low-sulfur crude oil is exported largely to the U.S. and Europe, where it is processed relatively easily and cheaply into gasoline.

Officials from China State Construction Engineering Corp. and Cnooc Ltd. (CEO), the Chinese state offshore oil company, weren't immediately available for comment, while China National Petroleum Corp, China's largest oil company by assets, said it had no information on the Nigerian government's announcement.

The deal also envisages Chinese help in constructing a petrochemicals facility, which could help Nigeria convert some of its big proven natural gas reserves, among the biggest in the world, into high-value products such as plastics for export.

China currently has limited drilling rights in Nigeria, something it is trying to change in order to reduce its dependence on oil from Angola, China's top supplier.

China imported just 28,000 barrels a day of Nigerian crude last year, a drop in the bucket compared with China's total oil imports of 4.77 million barrels a day in 2009, according to China Customs data.

TANZANIA

Noor Oil & Industrial Receives Funding for $3.5 Bln Tanzania Refinery Project

U.S.-based Noor Oil & Industrial Technology Inc. is planning to construct a 200,000 barrels a day refinery and an oil pipeline in Tanzania to supply refined fuel products to the domestic and regional markets, the company said May 12.

The company has already got funding for the $3.5 billion project which includes plans to run a pipeline from the coastal port of Dar Es Salaam to Mwanza on the shores of Lake Victoria and Kigoma on Lake Tangayika, in northern Tanzania, according to Minoo Davar, president of NOIT as the company is known.

The country's vast gold mines are located around the Lake Victoria basin.

"Plans, design and feasibility studies are in progress. The refinery will be a state-of-the-art facility and will yield 98% white products. The design of the project will allow room for expansion if the need may arise," the company said in a statement.

Talks with the government over the start of the project are in the final stages, Davar, said in remarks broadcast on national television May 11.

The company has already secured land in the coastal district of Mkuranga and an environmental impact assessment report for the project is being concluded, she added.

The refinery will process imported crude mainly from the Middle East.

The Tanzanian government will hold a 10% stake in the refinery and a 5% stake in the pipeline.

Negotiations to expand the pipeline into neighboring countries are in advanced stages, the company said.

Those countries include Uganda, which is expected to start oil production next year, as well as Rwanda and Burundi.

A Ugandan government official at the ministry of Energy and Minerals Development confirmed that NOIT had approached the government to discuss the possibilities of extending the pipeline from Mwanza to Uganda's oil region, along the western border with Congo, however, no deal has been reached so far.

"The government is keen to open a southern route through Tanzania," he said.

Landlocked Uganda currently depends on the Kenyan port of Mombasa for the bulk of its imports and exports.

Plans are already underway to extend an oil pipeline from Eldoret, in western Kenya to Kampala. The contractor has already changed the design of the pipeline to equip it with a reverse flow to allow future transportation of refined fuel back to Mombasa for export once Uganda starts refining oil.

People familiar with the situation say that an oil pipeline from Mwanza would be shorter and more viable to connect the oil region in Uganda and Eastern Congo.

Uganda is expected to produce around 200,000 barrels of oil once commercial production commences.

KUWAIT

Kuwait’s KNPC Orders Condensate Return System for Refinery

Thermal Energy International Inc, on May 3 announced a third GEM Condensate Return System sales order from Kuwait National Petroleum Corporation (KNPC) in Kuwait. The order, received on March 30, consists of one thousand Quartz GEM traps for use on low and medium pressure line drainage and trace heating applications at KNPC's Mina Al-Ahmadi refinery.

Thermal Energy has been retrofitting refineries of KNPC with GEM steam traps since 2005. The first GEM Traps installation at the Shuaiba refinery included 1,750 traps. According to KNPC's Engineer & Maintenance Manager at the Shuaiba Refinery, in addition to the steam savings, the installation of GEM steam traps also reduced the condensate return pressure from 175 psi(g) to 90 psi(g), resulting in improvement in condensate drainage from all steam headers. This success led to a second order of 1,644 traps at the Mina Al-Ahmadi Refinery, which was implemented in June 2009.

KNPC is a wholly owned subsidiary of Kuwait Petroleum Corp. ("KPC") which in turn is owned by the State of Kuwait. In addition to the Shuaiba (195,000 bpd) and Mina Al-Ahmadi (415,000 bpd) refineries, KNPC also owns a third refinery in Kuwait, Mina Abdulla (240,000 bpd), and is currently in the process of building a fourth.

QATAR

Qatar Puts Grassroots Al Shaheen Refinery Plans on Hold

Qatari oil minister Abdullah bin Hamad Al Attiyah said May 12 plans for the grassroots Al Shaheen refinery have been put on hold but the phase-two expansion of Ras Laffan condensate refinery will go ahead.

"We hold the plan," Attiyah told reporters at an energy conference in Doha when asked about plans for the Al Shaheen refinery.

"We are concentrating on the expansion of the Ras Laffan condensate refinery. We will go ahead with phase two--it's more economical," he added.

UNITED ARAB EMIRATES

Abu Dhabi's Takreer Awards $463 Mln Project to Hyundai

Takreer (Abu Dhabi Oil Refining Co.) announced that a contract worth US$463 million has been awarded to Hyundai Engineering Co. Ltd. for engineering, procurement, construction and commissioning (EPC) works of the Group III Base Oil Production Facilities Project at Ruwais Refinery.

The planned facility will be capable of producing 500,000 tonnes per year of Group III Base Oils as well as 100,000 tonnes per year of Group II Base Oils. The project comprises a new Pre-Distillation, Hydroisomerization and Product Distillation Units. The project also includes a revamp of the existing Hydrocracker Unit, new storage tanks and integration with existing refinery units and utilities.

Takreer Ruwais Refinery existing Hydrocracker complex will provide the feed stock for the project. The latest hydro-processing technology will be applied together with its integration with Takreer existing Hydrocracker facilities for producing high quality base oils. The base oil production facilities have been designed to comply with U.A.E. and International Environmental Standards.

Group III Base Oil is a high-quality and environmentally friendly base oil used for blending top-tier lubricants for car engines. The Group III base oils have a long life and significantly increase the drain intervals of car lubricants.

The objective of the project is to provide TAKREER with greater diversity in refined products by adding new high value Group III lubricating oils.

TAKREER, a subsidiary of Abu Dhabi National Oil Company (ADNOC), stated that the project is due to meet commercial production by end of 2013.

McIlvaine Company,

Northfield, IL 60093-2743

Tel: 847-784-0012; Fax: 847-784-0061;

E-mail: editor@mcilvainecompany.com