Blue Dolphin's Nixon Refinery Revived by the Eagle Ford

Nixon Refinery Map - Blue Dolphin

Blue Dolphin's Nixon refinery is reaping the Eagle Ford harvest. It's a real estate thing - "Location, Location, Location".

The Nixon Refinery was originally purchased in June of 2006 for $16 million, but Blue Dolphin has been investing to get the plant back to spec after being idled for years.

The refinery began taking Eagle Ford crude early in 2012 and has capacity for 15,000 b/d. As of the third quarter of 2012, Blue Dolphin was running the refinery at about 70% of capacity or 10,500 b/d. The refinery's location in the heart of the Eagle Ford provides local feedstock that doesn't need to be transported hundreds of miles. The plant's inland location also positions it well for getting premium product prices. It's a win-win for Blue Dolphin.

Nixon Refinery Photo

Here are a few more details related to the Nixon Refinery:

• 15,000 b/d of capacity
• 40-48 degree API crude
• Transport in and out is by truck
• The facility is further inland than most Gulf Coast refineries and can get better product prices
• 130,000 bbls of crude storage
• 135,000 bbls of product storage
• 56-acre facility has room for expansion

This isn't Blue Dolphin's only stake in South Texas - Blue Dolphin Purchased An Option to Buy the Ingleside Refinery - Jan 2012. The Deal is still being negotiated, but growing Eagle Ford crude production only makes the refinery more attractive.

You can also read more from an article published by Vicki Vaughn at MySA.com

Valero Houston Refinery Expanding for Eagle Ford Crude

Valero Houston Refinery

Valero plans to boost Eagle Ford refining capability by adding a 90,000 b/d crude topper at its Houston refinery. The 160,000 b/d refinery is set up to refine the typical light, sweet crude, but the topper will allow the facility to process even greater volumes of lighter Eagle Ford Crude. As much as 40% of Eagle Ford crude production is consider condensate and has an API gravity of more than 50 degrees.

The topper will essentially separate components that are too light before they enter the crude unit.

William R. Klesse made the following comment just a few months prior: "So we have quite a study going on, for instance, at Corpus Christi and our Houston Refinery, where at the Houston Refinery we have a very large cat cracker and yet, we don't have a lot of crude capacity. So these are the things that tie to our whole strategy statement that I spoke about earlier where we look at things that continue to, in the essence, lower our overall cost to produce from the womb to the tomb."

The upgrade at the Houston Refinery will allow the company to refine greater volumes of domestic crude, which can be purchased at a lower cost than foreign crude. The upgrade will allow for greater production of gasoline and diesel from the refinery.

This announcement follows Flint Hills Resources' $250 million plan to upgrade its Corpus Christi Refinery. The Flint Hills plan was announced in August of 2012.

Gulf Coast refineries spent years readying for heavier crudes from South America, but the latest boom in domestic production has reversed the trend. Now, refineries like Valero and Flint Hills are preparing to refine more light crude.

Eagle Ford Crude to Canada? - Valero Gets Approval

Valero Quebec City Refinery

Valero received US Department of Commerce approval to ship Eagle Ford crude oil to a refinery in Quebec City, Canada. A shipment has yet to set sail, but the company expects it could save $1-2 per barrel by utilizing Gulf Coast (Eagle Ford) volumes versus crude shipped across the Atlantic.

The Department of Commerce permit was approved in November and is good for 12 months. The permit restricts exports to Eastern Canada. Valero has not indicated when it will begin making shipments to the Quebec refinery from the Gulf Coast.

Read the full article at bloomberg.com

NuStar - ConocoPhillips Ink Midstream Deal - Expanding Crude System

NuStar - ConocoPhillips Pipeline and Terminal Expansion

NuStar Energy and ConocoPhillips have agreed to a long-term pipeline and terminal services agreement that is supporting expansion of NuStar's crude oil pipeline system in the Eagle Ford.

Nustar plans to expand its pipeline system and add a 100,000 b/d terminal in Pawnee, TX. The new terminal will connect to an existing 12-inch pipeline that moves crude from Pettus to Three Rivers. From there, the pipeline will be extended to an existing Oakville Terminal for delivery to the company's North Beach Terminal. New truck receiving facilities in Pawnee and Oakville are planned, along with new refinery connections in Corpus Christi.

NuStar Announced a $425 Million South Texas Acquisition from TexStar Midstream just a month earlier.

Curt Anastasio, CEO of NuStar commented: “This expansion, backed by major producers like ConocoPhillips, cements NuStar’s position as a key logistics provider for Eagle Ford Shale play. We are fortunate to have extensive pipeline and terminal assets already in operation throughout the region with the capacity to easily support an expansion of this size and help support the incredible production growth taking place in the Eagle Ford Shale play.”

A new ship dock in Corpus Christi is already under construction. The private dock will give NuStar access to waterborne markets.

Pipeline expansions are expected to be completed in the fourth quarter of 2013 and the dock facility will be finished in the first quarter of 2014. Total costs for the Conoco supported expansions is estimated at $100-120 million.

Plains All American - Chesapeake Reach Deal for Eagle Ford Gathering - $125 Million

Chesapeake Eagle Ford Rig Map

Plains All American (PAA) added another deal to Chesapeake's list of midstream sales. The companies agreed to a $125 million deal for crude oil and condensate gathering assets located in Webb and Dimmit counties. This follows a Chesapeake deal with Access Midstream Partners for $2.16 billion that also included Eagle Ford assets.

The assets include 40 miles of crude oil and condensate gathering lines with capacity to move 50,000 b/d, 150,000 bbls of storage capacity, 300,000 bbls of storage capacity under construction, and a truck unloading terminal.

Chesapeake also made acreage dedications including future production as part of the sale (CHK's Eagle Ford acreage is highlighted in the map above). The gathering assets will now connect with PAA's existing assets in the area.

CHK's CEO Aubrey McClendon made the following comment as part of a press release related to a larger midstream package:

“We are pleased to announce further progress towards our asset sale goals for 2012-13. We look forward to completing additional asset sales and achieving our goals of strengthening our balance sheet, tightening our asset focus and increasing returns to shareholders.”

Read the press release at paalp.com