Hearing set on Lima refinery

Husky Energy seeks tar-sands permit for $300M upgrade

9/28/2013

LIMA, Ohio — Canada-based Husky Energy Co. would have the capability to refine tar sands at its Lima refinery if the Ohio Environmental Protection Agency authorizes the company’s plans for a $300 million upgrade.

But Mel Duvall, a Husky spokesman, said the type of heavy crude most likely to be refined there differs from the company’s vast reserves of bitumen, although both are in Alberta. Bitumen, sometimes known as oil sands, was referred to as tar sands in the Energy Policy Act of 2005 that Congress passed during former President George W. Bush’s administration.

Mr. Duvall also said the project being contemplated in Lima is not part of the joint partnership Husky has with BP plc to refine tar sands at BP’s Toledo refinery in Oregon.

Husky is seeking an Ohio EPA permit for equipment changes that will be required for the refinery to stay in compliance with U.S. EPA air-pollution laws if the project is completed.

The agency said it will take oral comments at a public information session and hearing at 6:30 p.m. Tuesday, inside Lima City Council chambers, 50 Town Square.

Written comments will be accepted through Oct. 7, the agency said.

The proposal calls for the company to make changes to existing units to allow the processing of heavy oil. Equipment upgrades and a new sulfur recovery unit are part of the plan.

The heavy oil would be transported to the refinery through existing pipelines.

The Lima refinery, formerly owned by BP, is used by Husky to produce up to 155,000 barrels of petroleum products a day, mostly from lighter crude.

The retrofit would allow Husky to produce 40,000 of those barrels a day from either heavy crude or bitumen, Mr. Duvall said.

The permit under consideration states the heavy crude and bitumen need different pollution controls because of the higher sulfur and acid contents of that oil.

The project is pending approval by Husky’s board of directors, as well as state environmental regulators. The company has approved an expenditure of $50 million for preliminary engineering.

Another Husky spokesman, Kim Guttormson, said the company is “moving forward with preliminary engineering design.”

If approved, the project likely would be completed in 2017, she said.

“Husky’s overall strategy for the Lima Refinery is to continuously look at ways to increase the flexibility of the crudes we run, the products we make, and the markets we access. By building in the option to run a limited amount of heavier crude, we increase our ability to respond more quickly and efficiently to the market,” Ms. Guttormson said.

The 127-year-old refinery, which is along South Metcalf Street, employs 440 workers, and creates jobs at any one time for as many as 200 contractors.

Earlier this year, BP-Husky Refining LLC unveiled a $400 million addition to BP’s Toledo refinery in Oregon for refining tar sands as part of a joint venture between the two companies. The two companies share ownership of reserves in Alberta, where Husky is the majority owner, and the Toledo refinery, where BP has maintained majority ownership.

That refinery employs 650 people.

It can process up to 160,000 barrels of crude oil a day, including 42,000 barrels of gasoline a day. That refinery also produces jet fuel, diesel, several fuel gases, pet coke, sulfur, and asphalt.

Contact Tom Henry at: thenry@theblade.com or 419-724-6079.