Have you thought about what is in a barrel of oil? At HollyFrontier, a refiner in Tulsa, it’s more than just fuel for your auto or heating. Holly Oil merged with Frontier Oil in 2009. The company strives to get 95% to 98% of saleable product out of every barrel that comes in. Texaco erected the first portions of the plant in 1910, so familiar to Tulsan’s, sitting across the Arkansas River from our beautiful skyline. SUNOCO and Sinclair have also had ownership over the years. The Wall Street Journal article linked below talks about Holly’s view of being one of the few to concentrate on diesel, rather than biofuels.
Read the entire article at the Tulsa World, and I thank them and HollyFrontier for the informative graphic.
The future of U.S. refining is looking murky, with demand for oil-based fuels in the doldrums and lawmakers threatening to squeeze petroleum profits with a cap-and-trade system.
That doesn’t bother Matt Clifton. The chief executive ofHolly Corp., a small Dallas-based refiner, closed a deal on Monday to buy a refinery in Tulsa and plans to pump some $150 million into it to bring it up to speed. People are too downbeat about the prospects of good old crude oil, he figures, creating a buyer’s market for assets.
“Oil is still going to play an important part in our energy requirements,” he says.
To him, the timing couldn’t be better to buy a refinery. Because there is hardly anyone else out there shopping, he got what he considers a great price for Sunoco Inc.’s Tulsa refinery — $65 million, roughly the cost for the land and an oil product terminal, but not the units that transform oil into usable products such as gasoline and diesel.
While some bigger refiners, including Sunoco and Valero Energy Corp., are shifting gears to venture into ethanol and other biofuels, Mr. Clifton is betting that oil-based fuels will remain profitable. In particular, he’s bullish on diesel.
“Biofuels will take longer [than most people think] to get in the market and take a longer time to impact the demand trends,” he says.
In contrast, diesel is already here and demand for it is driven by developing regions, such as Asia and the Middle East, where green concerns have not yet transformed the fuel slate.
Although the economic downturn is drying up diesel demand right now, he expects it to shoot up once the global economy recovers.
Holly’s new refinery is set up to produce more diesel than gasoline, so it would benefit from higher global prices for the fuel, says Mr. Clifton. But because it is in Tulsa, it doesn’t face much competition from others.
Read more at the WSJ link above.