HollyFrontier Mulls Group III

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HollyFrontier is pursuing an ambitious capital investments plan, including improvements at its API Group I base oil plant in Oklahoma, and possible Group III production at its refinery in Utah.

Consultancy Kline & Co. projects that global Group III supply will grow by more than 2.6 million tons by 2022. Kline estimates that will include 450,000 to 470,000 metric tons per year of Group III base oil from HollyFrontiers refinery in Woods Cross, Utah.

According to HollyFrontiers September 2013 investor relations presentation, it plans a phase one Woods Cross expansion with expected completion in early 2015. It would increase refinery capacity from 31,000 b/d to 45,000 b/d and be supported by a 10 year, 20,000 b/d crude supply agreement with Newfield Exploration Co. The presentation then describes a potential Woods Cross phase two expansion by 2016, including expansion of the refinery from 45,000 b/d to 60,000 b/d capacity, and addition of Group III base oil production.

HollyFrontier officials declined to comment on plans for a Group III plant in Utah, beyond the information disclosed in its investor relations presentation.

According to the companys web site, the Woods Cross refinery processes regional sweet and lower cost black wax crude as well as Canadian sour crude oils. It doesnt currently produce base oil.

HollyFrontier has completed a series of capital investments at its Tulsa, Okla., refinery, which has a base oil plant with 9,500 b/d Group I capacity. This includes a new heavy oil vacuum tower installed in late 2012. It gives us the flexibility to run much more heavy vis grades, Pat Gribbin, HollyFrontiers vice president of lubricants and specialty products, told Lube Report. When we run Tulsa, we run a much higher volume of lube quality crude than we can actually fit into the lube units. So we do have flexibility depending on what the market is doing – we can switch upgrades and move to a more heavy slate or light slate, depending on what the values are.

The Tulsa plant also now has expanded bright stock production, providing a wider range and deeper supply of heavy grades.

Also new is a raffinate splitter for enhanced feedstock control and higher aromaticity of aromatic oils, increasing solvency. The primary reason is to improve some of the process oils were producing, Gribbin explained.

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