BP starts new Whiting coker to swap sweet crude for Canadian

Thu Nov 14, 2013 6:26pm EST
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By Erwin Seba and Nia Williams

HOUSTON/CALGARY (Reuters) - BP Plc (BP.L: Quote) has started up a major new coking unit at its Whiting, Indiana, refinery, sources familiar with the facility's operations said, a delayed but crucial last step in the revamp of the sprawling plant so it can run mostly heavy Canadian crude.

The 102,000 barrel-per-day (bpd) coker, which began the lengthy start-up process earlier this week but may not reach full rates until next year, is a milestone in the $4 billion overhaul of the refinery, a project that has whipsawed oil prices on several occasions this year.

The new delayed coker, the last of four major units to be built or upgraded at Whiting, will mean the 405,000 bpd refinery can swap out generally more expensive light, sweet oil for discounted oil sands crude from Alberta, likely lifting Canadian prices that have languished for much of this year.

Industry intelligence service Genscape and the sources familiar with Whiting operations reported activity on the coker on Thursday. A BP spokesman declined to discuss operations.

The change is also likely to result in more of the booming Bakken supplies heading further south, pressuring Midwest prices. The discount for U.S. benchmark crude at the Cushing, Oklahoma, hub versus Brent has widened by more than $5 in the past five days, the biggest five-day slump since early 2012.

BP has said the project will allow Whiting to run about 85 percent heavy crude, up from just 20 percent prior to the revamp.

"Whiting has been running a light sweet slate while the coker was getting back up to speed. You're at a point of the transition now and you will see demand destruction for light sweet oil in the mid-continent," said Stephen Schork, editor of the Schork Report in Villanova, Pennsylvania.

"Oil will have to discount, that is why you are seeing Brent moving as more of a premium to WTI."   Continued...

BP logo is seen at a fuel station of British oil company BP in St. Petersburg, October 18, 2012. REUTERS/Alexander Demianchuk/Files