ENVIRONMENTAL COSTS CLOSE WYOMING REFINERY

Amoco Oil Co. expects its Casper, Wyo., refinery will be closed permanently because of high costs to comply with federal environmental rules. The company announced at the Rocky Mountain Oil & Gas Association meeting in Denver earlier this month it will close the 40,000 b/cd refinery about Dec. 1 (OGJ, Oct. 7, Newsletter). It said keeping the plant open would require spending money that cannot be justified, given the marginal performance of the refinery in recent years.

Oct. 21, 1991

3 min read

Amoco Oil Co. expects its Casper, Wyo., refinery will be closed permanently because of high costs to comply with federal environmental rules.

The company announced at the Rocky Mountain Oil & Gas Association meeting in Denver earlier this month it will close the 40,000 b/cd refinery about Dec. 1 (OGJ, Oct. 7, Newsletter).

It said keeping the plant open would require spending money that cannot be justified, given the marginal performance of the refinery in recent years.

"The $150 million capital investment needed for environmental projects, added to our small (plant) size, limited crude oil flexibility, and marginal performance tipped the scales," said Larry McVay, refinery manager.

"Our experience with closed refineries and our review of the economics leads us to conclude that a sale is very remote," McVay said.

The plant has been averaging crude runs of about 28,000 b/d the past few years. It can run only sweet crude, with local supplies declining.

ENVIRONMENTAL REQUIREMENTS

McVay noted Clean Air Act fuel provisions were not the key in deciding to close the plant.

"Rather, it is the number of other environmental requirements that make the economics of the refinery unacceptable," he said.

Those requirements flow from rules under such laws as the Resource Conservation and Recovery Act, Clean Air Act, and Clean Water Act, McVay said. They require the plant to undertake such projects as upgrading its entire sewer and wastewater treatment systems, installing more emission control equipment, and adding more facilities and processes to meet stricter rules on hazardous and nonhazardous waste management.

"Amoco is committed to protecting the environment and will spend several billion dollars to ensure its refining system meets environmental requirements of the 1990s," McVay said. "However, the enormous expenditures required make it imperative that we commit our capital to refineries that have a more favorable economic outlook."

The company earlier announced a $300 million program to build units to remove sulfur from diesel fuel at its 433,000 b/d Texas City, Tex., refinery and 350,000 b/d Whiting, Ind., refinery (OGJ, Oct. 7, p. 44).

EMPLOYEES, MARKETING

Amoco told the 210 refinery employees it will offer most workers transfers to other Amoco sites. Employees who do hot move will be offered a severance program. The transfer and severance packages for represented employees are subject to negotiation with the local union.

As a result of the closure, the company will no longer supply about 50 Amoco gasoline service stations that receive product from terminals at Casper and Cheyenne, Wyo. Amoco has no plans to stop marketing in Colorado or western South Dakota, areas also served by the Casper refinery. It is considering options to supply those areas.