Wednesday, June 6, 2001

Abilene refinery not likely to reopen

By Bobby Horecka Reporter-News Staff Writer

When Abilene’s Pride refinery announced plans in 1997 to close its oil refining operation, pump mechanic Johnnie Slaughter offered a bit of foresight.

“This place will be a ghost town one day,” he said.

In large part, his prediction came true. Although Pride remains an active pipeline terminal and fuel distribution point, the machinery needed to refine crude is long gone, as are the hundreds of workers.

Now, industry analysts point to the need for more refineries to supply the nation’s energy demands. That’s part of the reason gasoline and diesel costs so much, they say — supplies of refined oil are short and existing refineries can’t produce more.

But the chances of Pride returning to the refining business are slim at best, said Brad Stephens, company chairman and chief executive officer. The costs to restart the plant are too high.

Even if the plant resumed operations, its refining capacity isn’t enough to dent overall supply problems, he said. Plus, rehiring the trained work force Pride once employed is next to impossible, Stephens said. Most have moved on to other occupations, other communities.

Slaughter originally planned to move to Corpus Christi to find another refinery job, but ultimately stayed in the area. He owned a home here and he and his wife weren’t anxious to start over again elsewhere.

Today at age 57, Slaughter works at the city’s water treatment plant near Hamby.

Many of the mechanics and maintenance workers took work locally in similar trades. But several of the trained operators took their skills overseas, Slaughter said.

Bill Stevens, executive vice president of the Texas Alliance of Energy Producers, said Pride’s fate is no different from that of many other refineries throughout the country.

More than 300 refineries existed in the United States 25 years ago, compared to 152 today, according to the American Petroleum Institute, a Washington, D.C.-based petroleum industry association.

One need only scan the Interstate 20 corridor to get a good idea of the plight facing smaller refineries, Stevens said. In addition to Abilene’s closure, refineries in Fort Worth, Big Spring, Odessa and El Paso have either shut down or changed owners during the last few years.

When oil prices slumped through the 1990s — down to less than $10 a barrel versus today’s $25 a barrel — smaller oil refiners couldn’t handle the losses, especially when competing against much larger refineries on the Gulf Coast.

The I-20 facilities each refined about 15,000 to 50,000 barrels of crude oil per day, Stevens said. Refineries on the coast range from about 500,000 to 1 million barrels daily.

One barrel contains 42 gallons of crude oil. That amount can make about 20 gallons of gasoline, nine gallons of diesel, four gallons of jet fuel and about 12 gallons of other petroleum products, such as lubricants and kerosene.

The end volume of products is nearly 3 gallons more than the original 42 gallons of crude because of additives some products require during processing, according to the API.

Pride’s main product when it opened in the 1950s was jet fuel for Dyess Air Force Base. It began a crude gathering operation in the 1970s and today sells some 20 million gallons of gasoline, diesel and jet fuel each month for Equiva Trading, formerly Texaco.

Stephens said Pride disperses far more fuel from pipelines as a distributor than it ever produced as a refinery. Those lines, which once piped crude to the coast for refining, today bring refined petrol products from the Gulf.

The fuel sold by Pride comes from coastal drilling and refining operations, Stephens said. Big Country drillers send their crude to refineries north and northeast of the area. The nearest remaining oil refineries are in Big Spring and Borger, near Amarillo.

Flow problems

Regardless of which direction pipelines are flowing, a much bigger problem in rebooting a refinery comes in a different sort of flow — a cash flow problem.

Stephens couldn’t offer an exact figure on what it would take to get Pride refining again, but termed it “extremely expensive, prohibitive in some cases.”

Stevens, the Texas Alliance executive, put the figure somewhere in the tens of millions of dollars for any company to refine oil at an existing facility.

“You can’t just flip on a switch and start refining again,” he said.

Instead, companies face huge investments in general maintenance and possibly replacement of the parts. Depending on how the facilities were mothballed, the costs can vary greatly, Stevens said.

At Pride, Stephens said, many of the pumps, pipelines and tanks at the refinery are still in good working order. But before any refining could occur, Pride would need another desulfurization unit, a main component to the diesel refining process.

The old one was sold to Amoco and removed from the Abilene facility, he said.

Top those expenses with the dollars needed to meet stricter new environmental laws, and most companies can’t approach the funding necessary, Stevens said.

Plus, Pride filed for bankruptcy earlier this year. The initial court filings indicated the company owes almost $16 million to its 20 largest creditors. Like many other refineries along I-20, there’s a large debt issue involved before even thinking about repairing or revamping their facilities, Stevens said.

Finding qualified employees to run a refinery would also pose a problem, Stephens said. When Pride shut down, Stephens said, workers with decades of experience were fired. Gathering them again would be next to impossible.

Today, Pride’s pipeline operations employ 35 people in Abilene, Aledo and San Angelo. The company was once a workplace to 550.

Instead of reopening the Pride refinery, Stephens said, a more likely scenario for the company is selling what’s left of its refining units and continuing to serve as a fuel distributor. He called it the more economically feasible route.

‘That’s too bad,” said Slaughter, the former employee.

“I know a lot of people would sure be ready for that place to open up again,” he said. “Jobs really aren’t that easy to come by anymore in this area.”

Contact resources writer Bobby Horecka at 676-6737 or horeckab@abinews.com

http://www.texnews.com/1998/2001/local/pride0606.html

-- Martin Thompson (mthom1927@aol.com), June 06, 2001