Houston-based Rock River Resources will build a small refinery and facility for shipping crude by rail in Utah, providing new transportation and local refining for the growing oil production in the state, the company announced Tuesday.
The $230 million project will be built in three stages, with the rail facilities coming on line first, followed by a microrefinery in Green River, Utah. The microrefinery will have a capacity of 10,000 barrels a day and will process local crudes and condensates into fuel oil, diesel and jet fuel.
“The location where we are in Utah, there are not rail lines for producers to send their crude out,” said Kim Green, a spokeswoman for Rock River Resources, explaining that the company will build a rail line to link its terminal to Union Pacific. “They have to truck it out, which is much more costly. We will have a good option for these producers, and they can have their crude come to us, we will store it, fill up a unit train and send it to wherever they are going to send it.”
The Green River refinery will be one of the first new refineries built in the United States since the 1980s.
A small refinery in North Dakota announced earlier this year is under construction. It is being built by a consortium of Native American tribes planning to refine Bakken crude that is shipped by rail and truck because of poor pipeline infrastructure.
The Green River rail facility is one of several new crude-by-rail projects that have been announced this year, as rail becomes a long-term transportation option for producers operating in new plays where the infrastructure to transport the hydrocarbons is non-existent or inadequate.
“We realized it would be a perfect location because there is not enough transport or refining capacity,” Green said. “Producers are not shipping their crude to the refineries in Salt Lake City because of the logistics of the rail and the route they have to travel.”
The Green River refinery will showcase the latest developments in emissions control technology, allowing it to be classified as a minor source of emissions by Utah regulators, Rock River Resources said. The company expects that most of the crude will come from Utah plays, including the Paradox Basin, the Uinta Basin and the Overthrust region.
The company plans to begin construction by the end of the year, and the operations are estimated to begin by 2014.
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