Most executives might call it a year to forget.
Since Nick Spencer began working at BP in October 2009, the company has had to shake the impact of the recession and fuel-price crash. Months later, the company faced a storm of negative public opinion and rising costs as a result of the oil spill in the Gulf of Mexico. BP also shuffled its management ranks, with Bob Dudley succeeding Tony Hayward as the London-based company's chief executive.
On a smaller scale locally, a piece of equipment -- a sour-water stripper -- was damaged in July after it fell off a transport vehicle as a contractor was bringing it to the refinery.
These were all things Spencer, Whiting business unit leader, couldn't control. But now, economic conditions have improved, the out-of-control Gulf well has been sealed, and the 150-foot-tall, 15-foot-wide cylindrical module is undergoing repairs and will be sent back to BP.
And, BP is continuing its $3.8 billion project to retrofit the 121-year-old Whiting Refinery to "accept a broader diet" of crude oils, the refinery's top executive said last week.
Spencer said at the end of November, project construction was about 56 percent complete and all phases of it are expected to be completed by the end of 2012. Construction began in May 2008.
Spencer replaced former refinery manager Dan Sajkowski, who left after working more than 20 years for Amoco and BP. Spencer spent the last 29 years working at ConocoPhillips, the past three of which were focused on developing a refinery in Saudi Arabia on the Red Sea coast.
Focus on safety, efficiency, the environment
In his first interview since becoming refinery manager, Spencer said the money spent and jobs created by BP in Northwest Indiana should be a source of pride for residents.
"It ought to be a facility that people are really proud of," said the London-born 52-year-old. "Not only because of the employment, but because of the investment and because of the fuel that it provides to this region that basically powers peoples' cars, trucks or industry. It provides a lot of the reason why the state can function."
Spencer said part of the challenge in managing the country's fifth-largest refinery is ensuring that safety is the first priority with all employees. The refinery is a 1,400-acre site spanning three cities, with 1,900 direct employees and thousands of contractors.
Another high-priority task is balancing day-to-day operations and the ongoing construction. By the end of this year, BP plans to finish installing large vessels as part of the project at the refinery. The vessel lifts can be complicated, as they require cranes to safely install equipment such as coke drums that weigh 400 tons each.
Refinery improvements include installing a new structure to remove more sulfur and nitrogen from gas oil, improving equipment so more sulfur can be removed from product streams, installing a new petroleum coker and reconfiguring the largest crude-distillation unit to process heavier blends of crude oil.
"There's nothing even close to it," Spencer said about the size and scale of the modernization project. "So from a refiner's point of view, this is a very exciting and almost unique opportunity. Even if you look around the world, there's very few projects of this magnitude in a refinery as big as this."
BP spokesman Brad Etlin said about $1.4 billion of project dollars will be spent on improvements to meet environmental standards. Spencer said the refinery was committed to meeting its environmental permits, but he declined to comment on the state of negotiations with regulators over current issues.
Refining more, producing more
Once the modernization project is complete, the refinery will increase daily motor fuel production by 40,000 barrels, or 1.7 million gallons. The amount of raw crude brought into the facility is expected to remain near current levels. The Whiting Refinery, which can process up to 405,000 barrels of crude oil per day, manufactures products such as gasoline, diesel, kerosene, heating and industrial oils, solvents and asphalt.
One crude-oil blend to be featured more prominently at the refinery is heavy Canadian crude oil, which can be extracted from oil sands in provinces such as Alberta. Jackie Forrest, director of global oil for IHS CERA, said there already are refiners in the Midwest and in other parts of the country that have been processing Canadian crude, and the Whiting facility is expanding its capacity to handle the product in larger volumes. Forrest, who is based in Calgary, Alberta, said refiners are making plays for the heavier crudes because they can be purchased at a discount even though they can be turned into the same products as the lighter crudes.
"We understand the properties of the crude oils very thoroughly," BP's Spencer said. "The project that we're doing here is designed to be able to handle the properties of these crude oils in a very robust and very safe and reliable way."
One reason many large-scale refinery developments aren't taking place in the United States is the changing dynamics in global energy demand, said Cindy Schild, refining issues manager for the Washington, D.C.-based American Petroleum Institute. She said long-term energy demand is expected to grow in the United States -- but it will grow significantly faster in developing countries. As a result, that's where companies are spending significant investment dollars, even though major infrastructure investments in the U.S. are taking place in Whiting and with Motiva's expansion of its Port Arthur Refinery in Texas, Schild said.
Spencer said he's no stranger to fluctuations in economic conditions for refineries. But BP believes there will be significant demand for energy, and the Whiting Refinery and its products will have a secure future, he said.
"This project is giving everyone a very positive view of the future -- that the refinery will be a reliable employer for the long term," Spencer said.
Copyright (c) 2010, The Times, Munster, Ind. Distributed by McClatchy-Tribune Information Services.
