Blue Dolphin owns a 15,000-b/d topping facility in Nixon, Texas.
Lazarus Refining & Marketing LLC, a wholly owned subsidiary of Blue Dolphin, closed earlier this month on a $10.0 million term loan with Sovereign Bank, a Texas state bank. The loan is guaranteed under the Business & Industry
Guaranteed Loan Program administered by the U.S. Department of Agriculture Rural Development Program.
The proceeds of the term loan will support continued commercial development of the Nixon facility, specifically construction of an additional 300,000 bbl of petroleum storage tanks, and also will be used to refinance an existing $3.0 million bridge loan with Sovereign.
In June 2015, Blue Dolphin announced plans to expand the Nixon facility and is currently constructing 500,000 bbl of petroleum storage tanks at the refinery.
When construction is completed, the Nixon facility’s petroleum storage tank capacity will exceed 1 million bbl and will provide capabilities to: enhance operational flexibility and margins as a result of being able to accept a broader variety of crude oil/condensate feedstocks at a lower cost and producing a wider variety of products; support the Nixon facility’s throughput growth of up to 30,000 b/d; and generate additional revenue from refined product and crude storage tank leasing to third parties.
“Over the past six months, Blue Dolphin has secured $35.0 million in 19 year financing. This new round of financing allows us to continue envisioned capital improvements to the Nixon Facility, helping to unlock the refinery’s embedded value,” Blue Dolphin President and CEO Jonathan Carroll said.
Carroll added that the Nixon facility has been running well, with peak refinery throughput surpassing 14,000 b/d. “By bringing the naphtha stabilizer and depropanizer units back online and with further debottlenecking efforts,
combined with the addition of more than 800,000 barrels of newly built storage tanks, we anticipate continued success with further expansion of the Nixon Facility,” he said.
The term loan matures in December 2034 and accrues interest at a rate based on the Wall Street Journal Prime Rate plus 2.75%.
The Nixon facility supplies intermediate and finished petroleum products primarily to customers in the lower portion of the Texas Triangle (the Houston-San Antonio-Dallas/Fort Worth area). The refinery initiated the production of jet fuel in mid-September 2013.
Jet fuel produced at the Nixon facility is sold into nearby markets, and intermediate products are sold to wholesalers and nearby refineries for further blending and processing. The Nixon facility uses light crude oil and condensate sourced in the Eagle Ford Shale as feedstock.
The company has bulk contracts, including month-to-month, six months and up to five-year terms in place with most of its customers. During third-quarter 2015, Blue Dolphin had five customers that accounted for approximately 81% of the company’s refined product sales.
