Monday, March 03, 2014
NIXON, Tex. — Since its construction in 1980, the small hard-luck refinery on the outskirts of this little cattle town has been locked shut for more years than it has been open.
Situated a hundred miles inland and with domestic crude oil production declining year after year, the refinery could not compete with the large refineries on the Gulf Coast that imported vast supplies of high-quality oil from Nigeria, Angola and North Africa. Rust built up around the refinery’s pipes and storage tanks over the decades, just as it did on dozens of other refineries that closed.
But suddenly a technological drilling revolution has unlocked a gusher of superior-grade sweet crude from the Eagle Ford shale field just east and south of Nixon. Two years after a small Houston company named Blue Dolphin Energy reopened the mothballed plant, trucks now line up to take fuels for shipment across the state.
Kinder Morgan, Martin Midstream and several other companies are planning to build simple stand-alone distillation towers to partly refine another growing product — condensates, the hydrocarbon liquids used for petrochemical production that bubble out of the ground with sweet crude. As many as a dozen of these projects are being planned for Ohio, Texas and Kentucky.
All the projects represent a sharp pivot for the refiners. Long geared to process heavy crudes imported from Venezuela, Mexico and Canada, the refiners in the nation’s midsection are suddenly faced with excesses of light domestic crudes and natural gas liquids from the shale fields. Few analysts saw the domestic oil flood coming a mere decade ago; now, refiners need to refit their plants for light sweet crudes.
“All these refiners have a bad taste in their mouth from spending all this capital building out to process all of this heavy crude and suddenly we have this light crude boom,” said Anthony Starkey, an analyst at Bentek Energy, a consulting firm.
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