* Alon seeking to add flexibility to crude supply
* Project to use of existing lines, new rail facilities
* Alon expects to start rail system in second half of 2013
By Kristen Hays
HOUSTON, Aug 9 Alon USA Energy Inc is in
"advanced discussions" to move cheap inland U.S. light crude to
its California refining system via new rail facilities and
existing pipelines, Chief Executive Officer Paul Eisman told
analysts on Thursday.
"This project will provide additional crude flexibility for
our California refining system to allow us to take advantage of
changing crude oil markets," Eisman said during Alon's
second-quarter earnings conference call.
"We have tankage and land available to support the project
and we have access to third-party pipelines," he said.
He said the company expects to submit applications for the
necessary environmental permits "within the next few days" and
aims to complete rail facilities by the third or fourth quarter
Alon's three plants in California operate as one 84,500 bpd
unit that produces refined fuels, asphalt and other petroleum
Alon is joining a growing trend among coastal refiners of
using rail to gain access to cheap inland crude, where
production is up but pipeline infrastructure is lacking to get
it to refining hubs.
Tesoro Corp expects to start up a new rail facility
that can bring in up to 50,000 barrels per day of North Dakota
Bakken crude to its 120,000 bpd Anacortes, Washington, refinery
next month. BP Plc is considering a similar setup for its
225,000 bpd Cherry Point refinery in Blaine, Washington, and
Phillips 66 is looking at moving Bakken crude via rail
to its 100,000 bpd Ferndale, Washington, refinery, as well as
increasing Bakken rail shipments to its 238,000 bpd Bayway
refinery in Linden, New Jersey.
Eisman said on Thursday that Alon would "more likely than
not" start with Bakken crude as well, but declined to provide
many details. He said the company was looking at a "unit train
concept" with a new rail terminal and the expected volumes
shipped would be significant.
"We are going to be flexible and bring in whatever crude
provides us with the maximum margins," he said.
Eisman also said Alon had no maintenance planned for its
refineries in the third quarter.