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Nixon Refinery Benefits From Eagle Ford Crude

Work continues on the Blue Dolphin Power Nixon refinery, close to Nixon, Texas, Thursday, Jan. 24, 2013. The plant was built round 1980 but was mothballed for years. Blue Dolphin, out of Houston, bought the plant in 2006 and is now processing Eagle Ford Shale crude.

Work continues on the Blue Dolphin Energy Nixon refinery, near Nixon, Texas, Thursday, Jan. 24, 2013. The plant was built round 1980 however was mothballed for years. Blue Dolphin, out of Houston, purchased the plant

Tankers line up at the Blue Dolphin Power Nixon refinery, close to Nixon, Texas, Thursday, Jan. 24, 2013. The plant was built around 1980 but was mothballed for years. Blue Dolphin, out of Houston, purchased the plant in 2006 and is now processing Eagle Ford Shale crude.

Tankers line up at the Blue Dolphin Vitality Nixon refinery, close to Nixon, Texas, Thursday, Jan. 24, 2013. The plant was constructed round 1980 however was mothballed for years. Blue Dolphin, out of Houston, bought the

A tanker traces up on the Blue Dolphin Power Nixon refinery, close to Nixon, Texas, Thursday, Jan. 24, 2013. The plant was built round 1980 but was mothballed for years. Blue Dolphin, out of Houston, purchased the plant in 2006 and is now processing Eagle Ford Shale crude.

A tanker lines up at the Blue Dolphin Energy Nixon refinery, close to Nixon, Texas, Thursday, Jan. 24, 2013. The plant was constructed round 1980 however was mothballed for years. Blue Dolphin, out of Houston, bought the

oil cracking tower

When a Houston-based underground coal gasification linc energy company purchased a refinery in Nixon about six years in the past, it had been mothballed for years — and it confirmed. Rust streaked the plant’s storage tanks and piping.

But after refurbishing, the 15,000-barrel-a-day refinery started to course of crude oil a few year in the past, with every drop coming from the Eagle Ford Shale.

“The drilling in the area is very impressive,” stated Jonathan Carroll, CEO of Houston-primarily based Blue Dolphin Vitality Co. “You can look at maps and see that we’re sitting right in the middle of the Eagle Ford, which is great.”

Nixon, about 54 miles east of San Antonio, straddles Gonzales and Wilson counties in a booming part of the shale play. That location “really makes every thing a bit simpler,” Carroll mentioned.

The corporate hasn’t disclosed how much it has invested in the Nixon refinery, however Carroll mentioned “it’s in the tens of thousands and thousands.”

Still, though the plant did have rust, “it was put collectively very properly when it was built” in 1980, he mentioned. “It’s sort of like having a 1957 Chevy within the garage with very low miles.”

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Blue Dolphin subsidiary Lazarus Energy LLC purchased the refinery out of receivership for about $sixteen million in June 2006 as a part of the previous owner’s Chapter 11 bankruptcy reorganization. (Publicly traded Blue Dolphin acquired Lazarus in February from Lazarus Power Holdings LLC, Blue Dolphin’s largest shareholder.)

And Blue Dolphin seems set to rejuvenate another idled plant. It has an choice to purchase the Ingleside refinery on Corpus Christi Bay from Lazarus Vitality Holdings. Discussions on the matter continue, Carroll said.

The Nixon refinery began to process crude oil in February 2012, and the plant reached 70 p.c working capability in September, based on a Securities and Trade Fee filing by Blue Dolphin. The corporate mentioned the plant might reach full capacity in the first half of this 12 months.

The refinery makes propane, butane and naphtha, which the corporate sells to different refiners or blenders as a gasoline component. It is also producing off-highway diesel for agricultural use. 6 m diameter pressure vessel 500 cubic meters There are plans to increase the Nixon plant to course of 25,000 barrels of crude a day, in response to a filing with the Texas Commission on Environmental Quality. Carroll was reluctant to talk about a potential growth, however he said it might be part of the company’s lengthy-term plans.

“You have to know that not every bank and financing outfit that we went to actually believed that it will ever be capable of operate,” Carroll stated. “For us to have this abundance of crude — for some (lenders) that may need been on the fence, it helped quite a bit.”

Also, Houston-based mostly Genesis Vitality LP “was a powerful believer” within the plan to resurrect the plant, Carroll mentioned. “They provide us with the crude oil and assist us market the merchandise.”

Extra Data
Genesis is the unique provider of crude to the Nixon refinery beneath a three-12 months agreement that expires on Aug. 12, 2014, in response to Blue Dolphin’s SEC document.

John Parry, a principal analyst at vitality consulting firm IHS Herold, said it is probably that the Eagle Ford crude underground coal gasification linc energy is discounted in contrast with the benchmark West Texas Intermediate crude, and that’s serving to the refinery’s backside line.

Carroll said he’s “not displeased” with the plant’s margins — the difference between what his company pays for crude and what it will get for the finished product.

As the plant has ramped up, it has given a lift to Nixon, inhabitants 2,397, which has annexed the plant.

The plant employs fifty three, and Mayor Maria Blanch said “the entire town is glad they’re right here as a result of it means employment for individuals in the area.”

However even before the refinery was restarted, extra trucks began to underground coal gasification linc energy roll through the Nixon space because of drilling in the Eagle Ford shale. Now the plant is adding about a hundred trucks a day to the visitors, Carroll estimated.

The truck visitors could be lessened if the crude would be shipped by way of pipeline. And a pipeline owned by Koch Pipeline Co. crosses the refinery’s property. Many of the crude is bound for Koch’s plants in Corpus Christi.