By Susan Caba
A $2 billion expansion of the ConocoPhillips’ Wood River Refinery
in the SW Illinois portion of the region, that will ensure the
facility’s commercial viability for decades—even as alternative
fuels gain in importance—is moving towards final approval in
early October.
If, as expected, the investment is approved by the directors
of ConocoPhillips and its partner in the project, TransCanada
Pipelines, the refining capacity at Wood River would increase
from 306,000 barrels of crude oil daily to between 360,000 and
370,000 barrels a day. The increased capacity would come on
line in 2010.
Even more significant than growth in the amount of crude that
could be processed is the fact that the Wood River facility
would be able to process more Canadian crude, called “sand oil,”
because it is essentially oil-saturated sand. This lower quality
raw product is much more expensive to extract and difficult
to refine, but the supply is plentiful and reliable.
“It has to be scraped out of the ground and diluted to make
it flow,” says Melissa Erker, ConocoPhillips spokesperson. Right
now, some Canadian crude is processed at Wood River. Phase One
of the expansion would increase that percentage and the second
phase would allow the refinery to devote 100 percent of its
capacity to Canadian oil, rather than the current mix of oil
from different sources. An additional $2 billion expansion is
in the earliest stages of consideration, says Erker. That would
bring capacity to almost 400,000 barrels a day.
“We are extremely pleased that ConocoPhillips has chosen Wood
River for this major investment,” says Patrick McKeehan, executive
director of Leadership Council Southwestern Illinois. “The facility
is unique within their system, and we are looking at the potential
of up to $4 billion of new investment.
“It will improve our national energy security and serve as an
important part of the growth of the region as a center for energy—The
Wood River facility is the anchor for our region.”
“The investment ensures the future of the facility, even as
other fuels are developed,” says Erker. “There is a lot of interest
in Canadian supplies and we just want to make sure we’re best
equipped to stay in the game.”
Despite the difficulty and expense of extracting and processing
Canadian oil, the prospect is desirable for several reasons—not
the least of which is that Canada’s government is stable and
friendly. With political uncertainty plaguing world oil markets,
the idea of having a plentiful North American source is undeniably
attractive. In addition, Canadian oil fields aren’t threatened
by the disruption of hurricanes.
The Wood River project is part of a $14 billion capital investment
program for ConocoPhillips facilities, announced last year as
part of the company’s partnership with TransCanada.
If completed, the project would mean about a five percent increase
in the workforce at the refinery. Currently, there are 800 fulltime
employees and another 200 contract workers, says Erker.
But construction—expected to take two to two-and-a-half years—would
require a “low average” of 1,500 workers, she says. At times,
the construction workforce would be much higher.
Management of both ConocoPhillips and TransCanada will consider
the final plans for the expansion once the Illinois Environmental
Protection Agency issues its approval and the necessary permits,
expected in late summer. The boards may take up the matter as
early as October. That will be the culmination of a preplanning
process that began some 18 months ago, Erker says.
ConocoPhillips and TransCanada are developing a 1,840-mile pipeline
from Hardisty, Alberta, to be finished in 2009.
Currently, the Wood River Refinery is the tenth largest in the
country, she says. At its 2007 annual meeting, ConocoPhillips
reaffirmed its commitment to a capital program of $13.5 billion
this year, with a goal of improving the efficiency of its plants.
Earlier in the year, the company declared a dividend increase
of 14 percent for 2007 and announced share repurchases of $4
billion for the year.
ConocoPhillips is the second-largest refiner in the United States
and, among non-government-controlled companies, the fourth-largest
refiner in the world. The company owns 12 refineries in the
U.S. The Wood River facility is its largest refinery.
It was built in 1918 on 336 acres 15 miles northeast of St.
Louis, near the confluence of the Mississippi and Missouri rivers.
Today, it occupies 2,200 acres. Much of the gasoline, diesel
and jet fuel produced at Wood River is sold in Chicago and Milwaukee.
The refinery is a primary supplier of jet fuel to Lambert-St.
Louis International Airport.
