October 17, 2022 [The Oklahoman] – Cushing is one of two sites competing for a $5.6 billion “next generation” refinery that, if built, would be one the country’s largest, processing 250,000 barrels of light crude daily.
Cushing and Victoria County, Texas, were chosen as finalists for the refinery by El Campo, Texas-based Southern Rock Energy Partners. Steven Ward, managing partner at Southern Rock Energy, told The Oklahoman the operation, the first major refinery to be built in 40 years, will feature several green energy features that will include use of solar power and recycled water and cut 90% of emissions associated with existing refineries.
“We have the opportunity to do what everyone has wanted to do,” Ward said. “We have a clean slate. We don’t need to make modifications. We get to do everything for the first time. “
If Cushing is chosen, it is projected to see the creation of 1,250 temporary jobs during three years of construction with a permanent full-time workforce of 423 employees. Southern Rock Energy forecasts an impact of $3 billion during construction and $150 million annually upon completion.
Southern Rock Energy expects to select a location by the end of the year.
Possible Cushing refinery would be first in operation there since 1987
Cushing, with a population of 8,200, is known as the “pipeline crossroads of the world,” with more than 430 oil storage tanks spread out along the edge of town. Bruce Johnson, director of the Cushing Economic Development Foundation, said discussions with Southern Rock Energy began about two years ago.
“This would be big for the state of Oklahoma, not just Cushing,” Johnson said. “It’s the biggest thing for Cushing since the late 1980s. And if you build up the proper infrastructure, that can open things up for secondary and tertiary industries to come in behind it.”
Plans call for new infrastructure to include an eight-bay truck terminal and a 300-car rail terminal.
“If you’re going to be refining crude to sell it and market it, you have to be close to where it is going to be sold or near the product you’re going to refine,” Johnson said. “Cushing has a lot of pipelines in and out, but none are designated for a refined product. It’s all raw product being shipped in and out.”
Cushing was once home to 53 refineries, but the last one was closed by Kerr McGee in 1987.
“As these refineries get older, they’re taken offline, and they don’t get put back online because it’s not cost effective to do that,” Johnson said.
Ward said the project isn’t possible without the finalists offering “strong support,” including undisclosed economic incentives. The Oklahoma State Department of Commerce declined to comment on the project citing its policy of not discussing proposals without a chosen location.
Ward said the refinery will process light crude, which is produced in the Permian, Eagle Ford and Bakken basins and is more plentiful than it was when older refineries were built due to the emergence of shale crude.
“We have an abundant supply of domestic energy,” Ward said. “But the configuration of the current refineries is for heavier crudes produced in Venezuela, Saudi Arabia and Mexico.”
Ward said the refinery will be the first designed and built to take advantage of green energy technology. He said the refinery will produce blue hydrogen with carbon capture to reduce water consumption by 90% and recycle 80% of waste water. Plans call for the refinery to be powered by 100% renewable electricity sourced by either the electrical grid, or generated by onsite from recycled waste heat, geothermal and solar systems.
Ward said site construction is expected to start early next year after site selection with completion in 2025.
“We’ve got a significant amount of equity committed and will finance the remainder with debt,” Ward said. “We’ve hit some good timing. This project has dragged on for a few years so this has allowed us to have a greener operation. We are down a million (daily) barrels of refining capacity in the U.S., and in the grand scheme the world is down 2 million barrels in refining capacity.”
Ward said the refinery is not designed to compete with existing heavy crude plants and takes into account the growing interest in non-fossil fuels energy.
“You can’t make a complete transition to renewables,” Ward said. “It’s going to take time, and there has to be a combination of these modes of energy. We’re including everything, and we see value in each and every one of them.”
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