Canadian operator of Montana Refining eyes expansion of oil processing capacity

2 hours ago

GREAT FALLS, Mont. - The Canadian company that owns Montana Refining Co. here is considering expansion of its oil processing capacity by more than 100 per cent.

Montana Refining, which Connacher Oil and Gas of Calgary bought 18 months ago from Texas-based Holly Corp., is equipped to handle 10,000 barrels a day. Connacher is considering a 15,000-barrel-a-day expansion.

The refinery is one of the United States' smallest, but it can handle what Connacher vice-president Cameron Todd calls "a very nasty barrel of crude oil." That is how he describes heavy crude that does not flow easily. Experimental projects in the 1940s led to the refinery's processing of heavy oil.

Oil sands production in Alberta is taxing North America refineries' capacity to handle heavy oil. Montana Refining has room to expand; the plant is on a 24-hectare site, much of it available land.

Expansion has been discussed in a preliminary fashion with the Montana Department of Environmental Quality. The department's Vicki Walsh said steps for issuing permits would include opportunities for public comment.

Meanwhile, Montana Refining has been undergoing improvements.

They include a $2.5 million project that upgraded the boiler system to reduce sulphur emissions; a $2 million project that allows wastewater to be treated in an enclosed system, instead of ponds; and $4 million worth of measures to improve efficiency at the plant.

A $20 million project planned for 2008 will increase Montana Refining's hydrogen plant capabilities. Hydrogen is used to strip sulphur out of heavy oil, Todd said. Odour from the refinery should be less noticeable after the work, he said.

U.S. government rules that took effect a year ago reduced the allowable sulphur emissions.

In 2006, the refinery's estimated sulphur dioxide emission was 774 tonnes, said Robert Gallagher, a Department of Environmental Quality engineer. Montana Refining's quarterly reports estimate sulphur dioxide emissions for the first nine months of 2007 at 6.12 tonnes. Emissions for all of 2007 will be calculated by late February.