(Adds coker restart next month, BP and analyst comments)
LONDON Oct 29 BP Plc said on Tuesday
that its upgraded 405,000 barrel per day (bpd) Whiting refinery
in Indiana will not reach full production until the first
quarter of 2014, an apparent slippage in the ramp-up timetable.
Problems with construction of a coking unit as part of the
$4 billion revamp of the refinery were reported by Reuters in
"We will progressively introduce heavy feedstock once the
coker is operational during the fourth quarter, and expect to
achieve full run-rate capacity during the first quarter of
2014," the company said.
It said the project "remains on track to commission the
remaining new units associated with the investment by the end of
the fourth quarter." The company made its statements on the
Whiting refinery in its release on quarterly results.
BP said the 100,000 bpd coker unit, crucial for a refinery
seeking to process cheaper and heavier Canadian crude, will come
on stream in November.
"This statement is consistent with what we have always said
about the project. Completion before year-end," a U.S.-based
spokesman for BP said in an email.
But analysts said that in previous briefings BP has said
Whiting would deliver a full year of profits in 2014.
"Whiting looks to have slipped slightly, with BP now talking
about full capacity to be reached in Q1 2014. Prior guidance had
been for 2014 as a 'full-year' of profitability for the
project," Tudor Pickering Holt & Co said in a note.
Once the upgrade is complete, heavy sour Canadian crude oil
will constitute 80 percent of Whiting's crude slate, BP said.
The Canadian grade now trades at a heavy discount of about
$30 per barrel to the U.S. benchmark futures contract, but BP
said the difference is likely to narrow as Whiting increases its
consumption of oil sands crude.
"One of the reasons why you see these big WTI-heavy spreads
right now is because, actually, that oil isn't being soaked up
yet by Whiting. As Whiting comes on stream we would expect that
differential to come down quite significantly," Chief Financial
Officer Brian Gilvary said during a conference call.
While BP will not reveal the WTI-Canadian spreads on which
the Whiting modernisation project was based, Gilvary said the
assumption was "certainly a number well below the 30-odd dollars
The upgraded refinery is one of the company's key profit
drivers for the future, and its output is closely watched by
traders for its potential impact on the price of crude oil in
(Reporting by Andrew Callus in London; Additional reporting by
Sabina Zawadzki in New York and David Sheppard in London;
editing by Keiron Henderson and Leslie Adler)