Posted on 08/21/2014 5:30:24 AM PDT by thackney
The Eagle Ford Shale is boosting the fortunes of Blue Dolphin Energy Co., which took a chance when it bought a rusty, mothballed refinery in the small town of Nixon about seven years ago.
Blue Dolphin bought the plant out of bankruptcy before the promise of the Eagle Ford was apparent. The company spent tens of millions refurbishing the plant and restarted it in early 2012.
Nixon, which is about 54 miles east of San Antonio, straddles Gonzales and Wilson counties in a booming part of the shale play. The plant buys every drop of its crude oil from drillers in the Eagle Ford.
“If you look at our last nine months, they’ve all been pretty good,” Blue Dolphin Energy CEO Jonathan Carroll said. The plant is the company’s main asset.
“Our advantage is our location,” Carroll said. “I don’t have exact numbers of how many barrels are within a 50-mile radius, but production there is probably 10 times what we can handle.”
For the six-month period ended June 30, Houston-based Blue Dolphin swung to a profit of $7.6 million compared to a net loss of $5.9 million for the first half of 2013.
Revenue for the six-month period rose more than 4 percent to $223.2 million.
The company credited more favorable margins and the addition of jet fuel to its product mix for the improvement.
The plant also makes naphtha, liquid petroleum gas, an oil-based “mud” that’s a component of drilling fluid, and gas oil, a waxy material used as a feedstock.
Yet the plant, which can refine 15,000 barrels of oil a day, operated at 77 percent capacity in the second quarter, while much of the industry’s rate topped 90 percent in May, according to the Energy Information Administration.
“We have a lot of things to improve on, and that’s what we’ve been doing,” Carroll said.
He said he’s focusing on raising the plant’s utilization rate as a key to better performance.
“We want to be careful about safety and doing it right,” Carroll said. “If you look at any other refinery out there, they’ve been operating for much longer, and at two years in, we’re still relatively immature.”
The plant’s growing pains were apparent in January when the Occupational Safety and Health Administration socked it with a $43,400 fine for process safety violations.
OSHA said that Blue Dolphin must update and complete an analysis of hazards at the plant and update its operating procedures.
“OSHA is out there to protect everyone, and we’re going to do whatever they ask us to do,” Carroll said. “They cited us purely on documentation. We are not putting individuals in harm’s way.”
Looking ahead, an expansion of the plant to 25,000 barrels a day “is certainly a possibility,” Carroll said, but the company would need to build additional storage first.
The plant employs fewer than 50 workers, but it has given a nice jolt to Nixon, population 2,320, up from 1,902, “which is where we were for years,” City Manager Manuel Zepeda said.
Wilson County Judge Marvin Quinney said there’s no doubt the plant has brought growth to Nixon.
But the Eagle Ford has brought so much change to the county that “it’s hard to tell what’s coming from the refinery,” Quinney said. “Obviously it has to be a benefit.”
If I am not mistaken either you or someone else had a article a few years ago about this plant... I could be wrong... but I do remember some article here on FR about some company investing in some old refinery a few years ago and had pictures of the place.
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