Alon on hunt for refinery assets
NEW YORK (Reuters) - Small, independent refiner Alon USA said on Tuesday it would be interested in buying more refineries in the United States if they met the company's criteria.
Alon USA President and Chief Executive Officer Jeff Morris told the Reuters Global Energy Summit in New York that his company would be interested in buying certain refineries, citing those in the Rockies and the Midwest.
Morris also said refineries that processed the cheaper priced heavy crudes were more appealing than those that ran the lighter, sweeter -- and more expensive -- grades.
"We like heavy. One attribute I like better than another and that's cheap," Morris said.
Morris, a former refinery manager turned CEO, said the company had studied the refineries in the United States and was looking for those that also were fairly complex or could be made fairly complex to produce a high percentage of cleaner burning fuels.
Morris said he looked at operating costs as opposed to margins, because they were controllable.
In August 2006, Alon, which is 72 percent owned by Alon Israel Oil Co., closed on the purchase of two small refineries in California that it subsequently combined into one now called the Paramount refinery.
"We bought them from two independent owners, put them together and operate them as one," he said, adding Alon is now in the process of upgrading both the capacity and complexity of that refinery.
"Paramount was not highly complex but we could see the ways to make it work," he added.
Morris said the Long Beach, California, refinery, now rated at 60,000 barrels per day, is on track to reach 90,000 barrels per day by 2009 and add complexity by producing more lighter fuels.
Alon's first refinery, a 70,000 barrel per day refinery in Big Spring, Texas, once owned by French Total, was once on the bottom of the heap in terms of reliability.
"Now it's one of the most reliable refineries in the country. Paramount is not there yet but we are making good progress," said Morris, who once served as refinery manager at Big Spring.
Morris said that Alon is not currently in talks now to add to its refinery portfolio but is in the process of deleveraging from its Paramount acquisition to be ready.
He added the company has no time table to add refinery assets to its portfolio, but rather it was opportunity based.
"We are a growth company. Our favorite geographic area is the Rocky Mountains and inland areas." he said.
"There are 25 or small-type refineries, some with private owners. There will be opportunities."