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Conoco to Expand West Coast Oil Refineries

November 17, 2005|From Times Staff and Wire Reports

ConocoPhillips, the third-largest U.S. oil company, said Wednesday that it would spend $1.2 billion to expand its West Coast refineries, part of an aggressive plan to invest more than $4 billion by 2011 to increase its U.S. refining capacity.

The projects, targeting nine of ConocoPhillips' 12 U.S. refineries, would allow the plants to process more oil, increase their ability to process high-sulfur crude oil and produce clean fuels, senior executives told analysts in New York.

Troubles with an already tight U.S. fuel market were exacerbated by damage to onshore and offshore facilities from hurricanes in the Gulf Coast this year, sending crude oil and gasoline to their highest prices and contributing to record third-quarter profits among oil companies.

Among its West Coast projects, ConocoPhillips will add crude-processing units to its Los Angeles Harbor area refinery, adding 40,000 barrels to the plant's daily processing capacity of 139,000 barrels, Executive Vice President Jim Nokes said.

ConocoPhillips is spending $1.3 billion on its East Coast refineries and $1.8 billion in the Midwest and Rocky Mountain regions, Nokes said. The expansions would equal adding a new "world-class refinery" in the U.S., the company said in a statement.

The investments will increase the company's total high-sulfur crude processing to 41% from 28%. High-sulfur or "sour" crude is costlier to refine but is significantly cheaper than the U.S. benchmark light sweet crude. The upgrades will allow ConocoPhillips to refine more high-sulfur oil from Canada.

Capital spending and investing will rise to $11.1 billion in 2006 from an estimated $10.6 billion this year, Chief Executive James Mulva said. Shares rose $1.82 to $64.70, climbing 49% this year.

Bloomberg News and Reuters contributed to this report.

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