Wood Group partners with Koch Industries to convert Texas refinery for Eagle Ford oil

(Valero Energy Corp.)
(Valero Energy Corp.)

Houston-based Wood Group Mustang has signed on with Koch Industries’ refining arm to convert its West refinery in Corpus Christi to process more crude oil from the nearby Eagle Ford Shale.

The $600 million “Project Eagle Ford” by Koch’s Flint Hills Resources subsidiary is part of a growing trend as more Gulf Coast refineries move to utilize cheaper, nearby domestic shale crude.

The oil that comes from Texas shale is lighter and sweeter — meaning it has low sulfur content — while most Gulf Coast refineries are designed to run heavier, more sour crude oil feedstock from Canada, Venezuela and parts of the Middle East.

More than 50 percent of the country’s refinery capacity and most of the country’s heavy crude processing capacity is located in the Gulf Coast. More than 80 percent of the Gulf Coast refineries have coking units to process heavier crude, according to the U.S. Energy Information Administration.

“This project will allow us to process more of the crude that is in our backyard due to Eagle Ford, while reducing criteria air emissions,” said Valerie Pompa, vice president and manufacturing manager for Flint Hills, in a prepared statement before construction began.

Wood Group Mustang, which is part of the Scotland-based Wood Group, said Thursday it will handle engineering, procurement and other services for the refinery modification project. The effort will allow the refinery to process 100 percent U.S. crude into transportation fuels.

Preliminary construction work began in December and Wood Group Mustang said the engineering is scheduled to be completed in mid-2016. The refinery has the capacity to process 230,000 barrels a day.

In the spring, Houston-based KBR was awarded the construction contract for the refinery project. KBR said its work is being done in phases during the next three years. KBR said it is expected $300 million in revenues from the project.