Delek adds unit at La. refinery, mulls sale of idled Calif. assets

Delek US Holdings Inc., Brentwood, Tenn., is building an alkylation unit to add product flexibility and increase margin potential at its 74,000-b/sd refinery in Krotz Springs, La.

Content Dam Ogj Online Articles 2018 01 180109 Delekus Krotzsprings Final

Delek US Holdings Inc., Brentwood, Tenn., is building an alkylation unit to add product flexibility and increase margin potential at its 74,000-b/sd refinery in Krotz Springs, La.

Already under construction, the 6,000-b/sd alkylation unit will convert isobutane into alkylate to enable production of multiple summer grades of gasoline as well as boost octane levels, according to a Jan. 9 filing by Delek with the US Securities and Exchange Commission.

Addition of the unit will increase gasoline production at the refinery to 44,000 b/sd from 38,400 b/sd while simultaneously reducing output of lower-value products to 8,700 b/sd from 11,100 b/sd, the filing said.

The alkylation project, which will cost an estimated $103 million, is scheduled to be completed in first-quarter 2019.

Content Dam Ogj Online Articles 2018 01 180109 Delekus Krotzsprings Final

Alongside the new alkylation unit, Delek also is exploring other improvement initiatives for Krotz Springs, including a transportation project aimed at reducing costs for crude deliveries into the refinery as well as a crude flexibility project to increase the site’s ability to access lower-cost crude grades, according to the presentation.

While the operator disclosed no further details about the crude transportation initiative, with regard to expanding crude flexibility, Delek said it is working with its logistics subsidiary to enable Krotz Springs to adjust its crude processing slate between Light Louisiana Sweet and West Texas Intermediate Midland crude grades based on market conditions and refinery runs.

Regarding its idled refining installations in Paramount and Long Beach, Calif., Delek said it is evaluating options to divest the assets as well as considering options to lower carrying costs of ongoing nonrefining operations at its Bakersfield, Calif., site.

The filing follows Delek’s Jan. 8 announcement of an internal consolidation measure to simplify corporate structure whereby Delek will acquire remaining limited partner units of Alon USA Partners LP.

Delek already owns 81.6% of Alon USA Partners’ outstanding units through its July 2017 acquisition of Alon USA Energy Inc. (OGJ Online, July 3, 2017; Jan. 3, 2017).

Contact Robert Brelsford at rbrelsford@ogjonline.com.

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