Houston, 7 November (Argus) — Alon USA is shutting down its California refineries for up to a year until its 70,000 b/d Bakersfield refinery can be supplied with midcontinent crude, and the firm may choose to never restore crude processing at its 88,000 b/d Paramount refinery.
The US independent refiner had completed a shutdown at Paramount and was in the process of shutting down the Bakersfield refinery, chief executive Paul Eisman said.
“We feel like we've got good assets in California, but we're hindered by the issues around asphalt,” Eisman said.
Alon hoped to secure required permits and to deliver Bakken shale crude to the Bakersfield refinery as early as the fourth quarter of 2013. The company is focusing on railed crude, rather than pipelines, which Eisman said would move toward approval too slowly.
The lighter domestic crude would reduce asphalt production at Bakersfield, and reduce runs to a range of 50,000-70,000 b/d. Alon has been running Basrah, Oriente and California heavy crudes at the refinery. The company would continue to not run the coker at the refinery, but run a mild hydrocracker as a diesel hydrotreater and run another hydrocracker as configured.
“The key is not running the coker,” Eisman said.
But while not committing to any specific plan, the company seemed more likely to convert Paramount into a terminal. Logistical costs of moving crude and gasoil to the refinery had proven too expensive, but the facility could continue to operate as a terminal.
“We think there's opportunity and value in Paramount, but not necessarily to run crude,” Eisman said.
Crude run rates at the refiner's other facilities were strong in the third quarter. Alon's 70,000 b/d refinery in Big Spring, Texas, ran near capacity through the quarter, and its 83,000 b/d Krotz Springs, Louisiana, refinery ran at 70,000 b/d.
The company plans to run 71,000 b/d at Big Springs and 74,000 b/d at Krotz Springs in the fourth quarter.
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