HollyFrontier (HFC) to Expand Woods Cross Capacity; Signs 10-Year Crude Supply Agreement with Newfield (NFX)

January 4, 2012 4:09 PM EST
HollyFrontier Corporation (NYSE: HFC) today announced plans to expand capacity at its 31,000 barrel per day Woods Cross, Utah refinery to 45,000 bpd with an expected completion in late 2014.

The expansion scope includes the relocation / revamp of crude, fluid catalytic cracking, and polymerization units from a subsidiary of Western Refining Inc.'s (NYSE: WNR) Bloomfield, NM refinery to Woods Cross as well an expansion of the Woods Cross diesel hydrotreater and investment in associated utilities and offsites. HFC has signed a definitive agreement for the purchase of the Bloomfield units with Western Refining. HFC expects incremental yields from the expansion project to be approximately 60% gasoline and 40% diesel. The Company expects the cost of this expansion to be approximately $225 million. The Company also expects that this expansion will have a payback period of less than two years.

In conjunction with the expansion, HollyFrontier signed a 10-year, 20,000 bpd crude oil supply agreement with Newfield Exploration Company (NYSE: NFX). This agreement, which commences upon completion of the expansion, will supply black and yellow wax crude oil produced in the nearby Uinta Basin region to the Woods Cross refinery, which currently has capacity to process approximately 10,000 bpd of these crudes. Upon completion of this expansion, the Woods Cross refinery will be able to process approximately 24,000 bpd of waxy Utah crudes. This expansion and crude oil supply agreement, and expected completion timeline, are subject to HollyFrontier successfully obtaining the necessary permits and regulatory approvals.

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