Murphy Oil poised to launch $50 million project

Jun 18, 2009 (Superior Telegram - McClatchy-Tribune Information Services via COMTEX) -- MUR | Quote | Chart | News | PowerRating -- Murphy Oil U.S.A. is making plans to invest $50 million in its Superior refinery to keep it in business.

With new federal regulations on diesel fuels and gasoline, the project is necessary to continue the Superior operation, which employs more than 150 people and spends $170 million annually on local wages and services.

"There's not going to be any return for us," said Dave Podratz, Superior refinery manager. "This is $50 million that's going to keep us in business." The Superior facility has a refining capacity of 35,000 barrels of crude oil per day and is the smallest of Murphy Oil's three refineries worldwide.

Two major components of the project will reduce sulfur content in diesel fuel and benzene from gasoline.

"The first part is to remove additional sulfur from diesel fuel to meet new federal diesel fuel specifications," Podratz said. "We will essentially take that sulfur out of the diesel fuel."

Since the 2008 model year, diesel engines have been required to use technology -- scrubbers -- that requires ultra low sulfur content in fuels.

Podratz said the refinery has been producing some of that lower sulfur diesel fuel but has been limited in how much it could produce. He said the project will allow the refinery to increase its production of the low sulfur diesel "rather dramatically." The refinery has been operating under a small refinery exemption that expires June 1, 2010. Without the project, he said, the refinery would be out of the diesel business next year.

Two years from now, new federal standards for gasoline are driving the other major component of the $50 million project.

By 2011, federal regulations will also require lower levels of benzene, a natural component of gasoline. The plan includes a new distillation tower that would allow the refinery to prevent benzene from forming during the refining process and reduce the benzene content of gasoline.

"It's fairly complex," Podratz said. "But not as complex as when we built that sulfur removal unit a few years ago."

Podratz estimates the projects will create about 50 full-time jobs over the yearlong construction process, with more or fewer working during various phases of the project. An engineering and construction firm out of Kansas City is the general contractor, but Podratz said he anticipates local companies would be subcontracted to handle components of it.

During a public hearing Thursday, two speakers came forward in support of the project.

Dan Olson, a business manager for Laborers Local 1091 and president of the Superior City Council, said he was in favor of issuing the permit for the project.

"Murphy Oil has always been a strong partner with the community and any safety regulations that have ever been put before them have always been followed to my knowledge," Olson said. He said the company has been a strong partner in working with the city and building trades and provides the city with a strong tax base and many jobs.

"Murphy Oil has always been a solid, responsible developer here in the community," said Norm Vorhees, president of the Northern Wisconsin Building and Construction Trades, which represents 15 trade unions.

Rhonda O'Leary, Wisconsin Department of Natural Resources compliance engineer stationed in Superior, said the permits could be issued as early as next week depending on issues raised during the public comment period, which ends today. She said while she has received questions about the proposal, which could still result in comments, she was aware of none that would impede the issuance.

"There are a number of significant environmental benefits to this permit," Podratz said. "As it's clearly spelled out in the permit application, emissions at the refinery will increase ever so slightly -- five tons or so of sulfur dioxide a year -- but by removing the sulfur from the diesel fuel that we're going to sell is going to be removing from the tailpipes 1,600 tons a year. The net environmental benefit from this project is really great."

If issues arise, she said it could take as long as 60 days to issue permits.

"We're going to be ready to start work next week if the permit comes through," Podratz said.

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