American Refining on Growth Track


So much for speculation that American Refining Group is living on borrowed time.

The mite-sized oil company this week announced the startup of an isomerization unit at its Bradford, Pa., refinery, sending a message that the company is not going away anytime soon. The unit is part of the refinerys fuel line and does not affect its base oil plant. Still, officials said they are upbeat about all of the companys operations, including lubricants. Moreover, they said they plan to announce additional projects that will involve lubes.

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Its true that this unit is for our fuels production, but it demonstrates ARGs commitment to the future of our entire business, President and Chief Operating Officer Harvey L. Golubock said Monday. There will be other investments in our lubricants and packaging business, and we hope to have some announcements to make in the near future.

The new isomerization unit allows ARG to increase the octane of its gasoline production. The project cost more than $3 million and was financed in part by the sale and leaseback of the companys research and development buildings to the local industrial authority, which also provided a $400,000 loan.

The Bradford refinery has been operating since 1881, making it the oldest continuously operating refinery in the United States. It produces a variety of oil products, including base oils and finished lubricants. The base oil plant is the second-smallest of 21 U.S. base oil plants, with capacity to produce 2,600 barrels per day of Group I stocks.

As oil industry consolidation reduced the number of U.S. base oil producers in recent years, market observers have frequently cited ARGs refinery as a likely candidate to be closed. Golubock acknowledged such predictions Monday and seemed to take pride in the companys ability to defy them.

Many people gave us about six months in 1997, he said, referring to the year that ARG bought the refinery from the former Witco Corp. As Golubock noted, the plant had produced base oils for Kendall lubricants, but Witco sold that business to Sunoco. We had a refinery without a lubricant brand, and people didnt think we would survive. We think its a significant milestone that weve been able to stay afloat and fund a capital expenditure thats pretty sizable for a small company.

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