Profile: HollyFrontier Corp (HFC.N)
HollyFrontier Corporation (HollyFrontier), formerly Holly Corporation, incorporated in 1947, is a petroleum refiner, which produces light products, such as gasoline, diesel fuel, jet fuel, specialty lubricant products, and specialty and modified asphalt. HollyFrontier operates in two segments: Refining and Holly Energy Partners, L.P. (HEP). The Refining segment includes the operations of its El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross Refineries and NK Asphalt. The HEP segment involves all of the operations of HEP. The Company merged with Frontier Oil Corporation (Frontier), on July 1, 2011. On November 9, 2011, HEP acquired from the Company certain tankage, loading rack and crude receiving assets located at its El Dorado and Cheyenne Refineries.
The Company’s refinery operations serve the Mid-Continent, Southwest and Rocky Mountain regions of the United States. HollyFrontier owned and operated five refineries having an aggregate crude capacity of 443,000 barrels per day, as of December 31, 2011. During the year ended December 31, 2011, gasoline, diesel fuel, jet fuel and specialty lubricants represented 48%, 32%, 5% and 3%, respectively of its total refinery sales volumes. Its refineries are located in El Dorado, Kansas, (the El Dorado Refinery), Tulsa, Oklahoma (the Tulsa Refineries), which consists two production facilities, the Tulsa West and East facilities, a petroleum refinery in Artesia, New Mexico, which operates in conjunction with crude, vacuum distillation and other facilities situated 65 miles away in Lovington, New Mexico (the Navajo Refinery), Cheyenne, Wyoming (the Cheyenne Refinery) and Woods Cross, Utah (the Woods Cross Refinery). Light products are shipped by product pipelines or are made available at various points by exchanges with other parties and are made available to customers through truck loading facilities at the refinery and at terminals.
The Company’s principal customers for gasoline include other refiners, convenience store chains, independent marketers, and retailers. Diesel fuel is sold to other refiners, truck stop chains, wholesalers, and railroads. Jet fuel is sold for military and commercial airline use. Specialty lubricant products are sold in both commercial and specialty markets. LPG’s are sold to LPG wholesalers and LPG retailers. HollyFrontier produces and purchases asphalt products that are sold to governmental entities, paving contractors or manufacturers. Asphalt is also blended into fuel oil and is either sold locally or is shipped to the Gulf Coast. Tulsa West facility is 85,000 barrels per stream day refinery in Tulsa, Oklahoma. It owns Tulsa East facility is 75,000 barrels per stream day refinery that is also located in Tulsa, Oklahoma. In September 2011, HEP completed the Tulsa interconnecting pipeline project which facilitated a combined crude processing rate of 125,000 barrels per stream day. The El Dorado Refinery is a coking refinery.
The El Dorado Refinery is located on 1,100 acres south of El Dorado, Kansas and is a refinery. The principal process units at the El Dorado Refinery consists of crude and vacuum distillation; hydrodesulfurization of naphtha, kerosene, diesel, and gas oil streams; isomerization; catalytic reforming; aromatics recovery; catalytic cracking; alkylation; delayed coking; hydrogen production, and sulfur recovery. Supporting infrastructure includes maintenance shops, warehouses, office buildings, a laboratory, utility facilities, and a wastewater plant (Supporting Infrastructure) and logistics assets owned by HEP, which includes approximately 3.7 million barrels of tankage, a truck sales terminal, and a propane terminal. The facility processes approximately 135,000 barrels per stream day of crude oil with the capability. The Tulsa West facility is located on a 750-acre site in Tulsa, Oklahoma situated along the Arkansas River. The principal process units at the Tulsa West facility consists of crude distillation (with light ends recovery), naphtha hydrodesulfurization, catalytic reforming, propane de-asphalting, lubes extraction, methyl ethyl ketone (MEK) dewaxing, delayed coker and butane splitter units.
Tulsa West facility’s Supporting Infrastructure includes approximately 3.2 million barrels of feedstock and product tankage, of which 0.4 million barrels of tankage is owned by Plains All American Pipeline, L.P. (Plains), and an additional 1.2 million barrels of tank capacity was out of service, as of December 31, 2011. The Tulsa East facility is located on a 466-acre site also in Tulsa, Oklahoma situated along the Arkansas River. The principal process units at the Tulsa East facility consists of crude distillation, naphtha hydrodesulfurization, fluid catalytic cracking (FCC), isomerization, catalytic reforming, alkylation, scanfiner, diesel hydrodesulfurization and sulfur units. The Tulsa East facility’s Supporting Infrastructure includes approximately 3.75 million barrels of tankage capacity on the refinery’s premises, of which approximately 3.4 million barrels of tankage is owned by HEP. The primary markets for the El Dorado Refinery’s refined products are Colorado and the Plains States, which include the Kansas City metropolitan area.
The gasoline, diesel and jet fuel produced by the El Dorado Refinery are primarily shipped via pipeline to terminals for distribution by truck or rail. The Company ships product via the NuStar Pipeline Operating Partnership L.P. Pipeline to the northern Plains States, via the Magellan Pipeline Company, L.P. (Magellan) mountain pipeline to Denver, Colorado, and on the Magellan mid-continent pipeline to the Plains States. The Tulsa Refineries’ principal customers for conventional gasoline include Sinclair Oil Company (Sinclair), other refiners, convenience store chains, independent marketers and retailers. Sinclair and railroads are the primary diesel customers. Jet fuel is sold primarily for commercial use. The refinery’s asphalt and roofing flux products are sold via truck or railcar directly from the refineries or to customers throughout the Mid-Continent region primarily to paving contractors and manufacturers of roofing products. HollyFrontier’s Tulsa West facility also produces specialty lubricant products sold in both commercial and specialty markets throughout the United States and to customers with operations in Central America and South America.
The El Dorado Refinery is located about 125 miles, and the Tulsa Refineries are located approximately 50 miles from Cushing, Oklahoma, a crude oil pipeline trading and storage hub. Both its Mid-Continent Refineries are connected via pipeline to Cushing, Oklahoma. In addition, the Company has a transportation services agreement to transport up to 38,000 barrels per calendar day of crude oil on the Spearhead Pipeline from Flanagan, Illinois to Cushing, Oklahoma, enabling it to transport Canadian crude oil to Cushing for subsequent shipment to either of the Company’s Mid-Continent Refineries or to its Navajo Refinery. The Navajo Refinery has a crude oil capacity of 100,000 barrels per stream day.The Navajo Refinery’s Artesia, New Mexico facility is located on a 561-acre site and is a refinery with crude distillation, vacuum distillation, FCC, residuum oil supercritical extraction, (ROSE) (solvent deasphalter), hydrofluoric (HF) alkylation, catalytic reforming, hydrodesulfurization, mild hydrocracking, isomerization, sulfur recovery and product blending units. Supporting Infrastructure includes approximately 2 million barrels of feedstock and product tankage, of which 0.2 million barrels of tankage are owned by HEP.
The Artesia facility is operated in conjunction with a refining facility located in Lovington, New Mexico, approximately 65 miles east of Artesia. The principal equipment at the Lovington facility consists of a crude distillation unit and associated vacuum distillation units. Supporting Infrastructure includes 1.1 million barrels of feedstock and product tankage, of which 0.2 million barrels of tankage are owned by HEP. The Lovington facility processes crude oil into intermediate products that are transported to Artesia by means of three intermediate pipelines owned by HEP. The Navajo Refinery primarily serves the southwestern United States market. The Navajo Refinery primarily serves the southwestern United States market. The Company’s products are shipped through HEP’s pipelines from Artesia, New Mexico to El Paso, Texas and from El Paso to Albuquerque and to Mexico via products pipeline systems owned by Plains and from El Paso to Tucson and Phoenix via a products pipeline system owned by Kinder Morgan’s subsidiary, SFPP, L.P. (SFPP). In addition, the Navajo Refinery transports petroleum products to markets in northwest New Mexico and to Moriarty, New Mexico, near Albuquerque, via HEP’s pipelines running from Artesia to San Juan County, New Mexico.
HollyFrontier has refined product storage through its pipelines and terminals agreement with HEP at terminals in El Paso, Texas; Tucson, Arizona; and Artesia, Moriarty and Bloomfield, New Mexico. The Company uses a common carrier pipeline out of El Paso to serve the Albuquerque market. In addition, HEP leases from Mid-America Pipeline Company, L.L.C., a pipeline between White Lakes, New Mexico and the Albuquerque vicinity and Bloomfield, New Mexico. HEP owns and operates a 12-inch pipeline from the Navajo Refinery to the leased pipeline, as well as terminalling facilities in Bloomfield, New Mexico, which is located in the northwest corner of New Mexico, and in Moriarty, which is 40 miles east of Albuquerque. The Navajo Refinery is situated near the Permian Basin. The Company purchases crude oil from independent producers in southeastern New Mexico and west Texas, as well as from oil companies.
HollyFrontier also purchases volumes of isobutane, natural gasoline and other feedstocks to supply the Navajo Refinery from sources in Texas and the Mid-Continent area that are delivered to its region on a common carrier pipeline owned by Enterprise Products, L.P. The Cheyenne Refinery has a crude oil capacity of 52,000 barrels per stream day and the Woods Cross Refinery has a crude oil capacity of 31,000 barrels per stream day. The Cheyenne Refinery processes Canadian crudes, as well as local sweet crudes, such as that produced from the Bakken shale and similar resources. The Woods Cross Refinery processes regional sweet and black wax crude, as well as Canadian sour crude oils into light products. The Cheyenne Refinery facility is located on a 255- acre site and is a refinery with crude distillation, vacuum distillation, coking, FCCU, HF alkylation, catalytic reforming, hydrodesulfurization of naphtha and distillates, butane isomerization, hydrogen production, sulfur recovery and product blending units. Supporting Infrastructure includes approximately 1.6 million barrels of feedstock and product tankage, of which 1.5 million barrels of tankage are owned by HEP.
The Woods Cross Refinery facility is located on a 200-acre site and is a fully integrated refinery with crude distillation, solvent deasphalter, FCC, HF alkylation, catalytic reforming, hydrodesulfurization, isomerization, sulfur recovery and product blending units. Supporting Infrastructure includes approximately 1.5 million barrels of feedstock and product tankage, of which 0.2 million barrels of tankage are owned by HEP. The facility processes or blends an additional 2,000 barrels per stream day of natural gasoline, butane and gas oil over its 31,000 barrels per stream day capacity. The Company owns and operates four miles of hydrogen pipeline that connects the Woods Cross Refinery to a hydrogen plant located at Chevron’s Salt Lake City Refinery. The Cheyenne Refinery primarily markets its products in eastern Colorado, including metropolitan Denver, eastern Wyoming and western Nebraska. Crude oil is transported to the Cheyenne Refinery from suppliers in Canada, Nebraska, North Dakota and Montana via common carrier pipelines owned by Kinder Morgan, Plains All American Pipeline and Suncor Energy, as well as by truck.
The Woods Cross Refinery obtains its supply of crude oil from suppliers in Canada, Wyoming, Utah and Colorado as delivered via common carrier pipelines that originate in Canada, Wyoming and Colorado. HollyFrontier manufactures and markets commodity and modified asphalt products in Arizona, New Mexico, Oklahoma, Kansas, Missouri, Texas and northern Mexico. The Company has three manufacturing facilities located in Glendale, Arizona; Albuquerque, New Mexico; and Artesia, New Mexico. The Company's Albuquerque and Artesia facilities manufacture modified hot asphalt products and commodity emulsions from base asphalt materials provided by its refineries and third-party suppliers. The Company’s Glendale facility manufactures modified hot asphalt products from base asphalt materials provided by its refineries and third-party suppliers. HollyFrontier’s products are shipped via third-party trucking companies to commercial customers that provide asphalt based materials for commercial and government projects.
The Company owns Ethanol Management Company, is 25,000 barrels per calendar day products terminal and blending facility located near Denver, Colorado. It also owns a 50% joint venture interest in Sabine Biofuels II, LLC, a 30 million gallon per year biodiesel production facility located near Port Arthur, Texas. The Company owns a 75% joint venture interest in the UNEV Pipeline, a 400 mile 12-inch refined products pipeline from Salt Lake City, Utah to Las Vegas, Nevada, together with terminal and ethanol blending facilities in the Cedar City, Utah and North Las Vegas areas and storage facilities at the Cedar City terminal with Sinclair, its joint venture partner, owning the remaining 25% interest. The pipeline has a capacity of 62,000 barrels per calendar day (based on gasoline equivalents). The pipeline was mechanically completed in November 2011.
Holly Energy Partners, L.P.
As of December 31, 2011, the Company owned a 42% interest in HEP, including the 2% general partner interest. HEP owns and operates logistic assets consisting of petroleum product and crude oil pipelines and terminal, tankage and loading rack facilities in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. Revenues are generated by charging tariffs for transporting petroleum products and crude oil through its pipelines and by charging fees for terminalling petroleum products and other hydrocarbons, and storing and providing other services at its storage tanks and terminals. In additioin, HEP owns a 25% interest in the SLC Pipeline LLC (SLC Pipeline) that serves refineries in the Salt Lake City, Utah area. Revenues from the HEP segment are earned through transactions with unaffiliated parties for pipeline transportation, rental and terminalling operations, as well as revenues relating to pipeline transportation services provided for its refining operations. HEP has a 15-year pipelines and terminals agreement with Alon USA, Inc.
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