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Calumet seeks to invest $30 million in Superior refinery

The vacuum distillation tower (center) at the Calumet Refinery in Superior. This tower is used to separate diesel from asphalt. Calumet filed for permits today to upgrade its refinery in Superior. The proposed $30 million project would make the facility more efficient and competitive, but it won’t really change its output much, and the vacuum tower is one of the main feature that will be upgraded. (Clint Austin / caustin@duluthnews.com)

The oil refinery in Superior soon could be poised for a major overhaul.

On Monday, Calumet Specialty Products Partners L.P. submitted a permit application to the Wisconsin Department of Natural Resources, seeking permission to move ahead with a $30 million project designed to improve the efficiency of the plant.

While refinery manager Kollin Schade said that most of Calumet's recent investments at the facility have focused on complying with new environmental regulations, the proposed project has a different thrust.

"From our perspective, it was time to really start looking at projects that could help improve the flexibility and the competitiveness of the refinery," he said.

"Since 2004, we've invested over $100 million in environmental compliance at this facility," said Mark Darby, the refinery's environmental manager.

"But at some point you need to have an offset for those additional costs, and this is the first project since my tenure here, where people have come to the facility and identified a project that really improves the viability and the future of this facility. So we're very excited to have that project come to us," Darby said.

Calumet directly employs 185 people at its Superior refinery, as well as 80-120 private contractors at the same facility on a typical day.

If the project is approved, Darby said it could put an additional 50-100 local tradespeople to work during construction.

Schade said the project would improve the refinery's ability to adjust its product mix on the fly and seize on market opportunities.

But the refinery would not grow appreciably in scale. It would continue to refine about 36,000 barrels of crude oil daily.

"We're not looking to increase the crude (output) of this facility at all, but we are wanting to more effectively produce the products that we need," Darby said.

The permit process for the project is expected to take 15-18 months and will involve state and federal authorities. It will include an opportunity for public comment, as well as public hearings.

Cleaner cuts

Schade explained that the refinery basically separates crude oil into distilled components to produce a number of products, including: gasoline, diesel, asphalt, liquified petroleum gas, kerosene and bunker fuel.

"We're not the newest refinery, as you can imagine. We're more of a 1960s-'70s vintage facility, except for obviously the new process facilities that have been built. And when you look at the state-of-the-art for distillation and separation of products, they're much more advanced today," Darby said.

Schade said Calumet wants to revamp the refinery's vacuum tower, replacing its innards with new, more technologically advanced equipment.

"What we're hoping to do with this project is improve our separation capabilities to make much cleaner cuts when we produce these products, and that will improve the efficiency and the effectiveness of this facility and allow it to respond more strategically to the market, whether it's transportation fuels or asphalt for road building," he said.

"As an example, right now in our vacuum tower, the feedstock that goes to that particular unit contains distillates and gas oil and asphalt," Darby said. "When you're unable to properly separate all those components, you actually end up giving away distillates in your gas oil or your asphalt. And in today's very competitive market, if you're going to give away one of the more valuable products and have it consumed in asphalt, you're not being very efficient."

Asphalt highway

Schade said the upgraded facility should be able to produce higher-quality asphalt products that meet the increasingly stringent specifications called for in road-building products.

"We want to make sure that we continue to capture our local market, but we also want to stretch into areas of central or north-central Minnesota, into north-central Wisconsin and the U.P. and places like that," Schade said of the refinery's asphalt market.

"Asphalt is a very valuable product for this facility. It's been a niche for us historically throughout its existence, and we want to be able to pursue that market," Darby said.

But there's a catch.

"When you're running asphalt, then you produce a lower volume of transportation fuels. And you really need to be able to service two markets here," Darby said.

Schade said that during periods when asphalt is in high demand, Calumet aims to dial up its ability to receive more gas oil and naphtha via rail as feedstocks to bolster gasoline production.

With improved separation, Schade said the refinery should be able to significantly increase its diesel production simultaneously.

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