Alon advances Bakersfield refinery, rail project

California state regulators have approved Alon USA Energy Inc. to move ahead with a plan designed to expand existing receiving and processing options for North American shale light crude oils at its 70,000-b/d Bakersfield refinery.

California’s Kern County Board of Supervisors (KCBS) approved the permit for the Alon Bakersfield Refinery Crude Flexibility Project at a Sept. 9 hearing, according to KCBS and Alon.

The permit allows Alon to build a double-rail loop, which will be capable of receiving two unit trains/day of crude. The approval also permits Alon to make necessary physical modifications at the refinery to accommodate light crude oil processing, the company said.

“With this approval in hand, we are ready to start detailed engineering,” said Paul Eisman, Alon’s chief executive officer and president.

Alon said it expects to provide information on construction costs for the new rail terminal and anticipated crude-by-rail volumes at its third-quarter conference call, which has yet to be scheduled.

Construction of the rail terminal is scheduled to be completed by yearend 2015, Alon said.

Project details

The Bakersfield rail project will allow the refinery—which has a current permitted rail capacity of 13,000 b/d—to receive shipments of cost-advantaged light crudes from North Dakota’s Bakken shale and other Midcontinent locations to replace heavier US crudes produced on the West Coast, the company said.

These lighter crude slates will lead to improved product slates for the company’s California refining system, which also includes plants in Paramount and Long Beach, Alon said, adding that the California refineries likely will benefit from Monterey shale production as well.

While Alon did not disclose further details on the project in its latest release, the company previously was seeking a series of approvals, according to a draft environmental impact report (EIR) for the project released in May (OGJ Online, May 27, 2014).

In addition to requests to expand the refinery’s rail infrastructure, Alon also was pursuing approval to:

• Add as many as three boilers.

• Construct process unit upgrades and modifications, including complex upgrades to the refinery’s hydrocracking units, crude and vacuum atmospheric distillation units, and hydrotreating units.

• Repurpose existing tankage.

• Relocate and modernize existing liquefied propane gas truck rack and upgrade sales rack.

While the project’s expanded rail infrastructure will enable the refinery to receive cost-advantaged light crude supplies from North Dakota’s Bakken shale region, Alon does not plan to add any new processing units or increase the refinery’s existing 70,000-b/d crude processing capacity, according to the EIR.

After purchasing the Bakersfield plant in 2010 (OGJ Online, Feb. 17, 2010), Paramount Petroleum Corp., a subsidiary of Alon, has maintained only limited processing operations at the refinery, which is configured to process heavy crude oil feedstock.

Between 2011 and 2012, Alon used the Bakersfield plant to process untreated vacuum gas oil produced by its nearby Paramount, Calif., refinery into lighter, finished fuel products.

During first-half 2014, the Bakersfield refinery did not process any crude supplies, according to Alon’s latest 10Q filing with the US Securities and Exchange Commission.