Refinery forges ahead

It’s business as usual this week at the refinery in Superior.

Plans for a $10 million expansion at the refinery are still on track despite an announcement late last week by Murphy Oil USA: The company plans to sell its refining operations in Superior, Mereaux, La., and Milford Haven, Wales, to focus on exploration and retail sales.

“Nothing has really changed out here,” said Dave Podratz, Superior refinery manager.

However, the announcement that Murphy Oil’s board of directors approved the sale of refining operations took local officials and refinery employees by surprise late Thursday. Murphy Oil’s first indication of the plan came by e-mail the night before Chief Executive Officer David Wood held a telephone news conference to discuss the sale.

“Any time a major change involving one of our largest employers is announced it raises concerns,” said Douglas County Board Chairman Doug Finn.

Murphy Oil employs about 156 people at its Superior refinery and contributes about $100 million in salaries and services to the local economy, Podratz said.

Currently, the local refinery is planning another $10 million expansion of its rail loading facilities. The plan would add 17 additional sites to load refined asphalt and gasoline for rail delivery to customers and bring in crude by train from North Dakota wells not served by pipelines, Podratz said.

In anticipation of wetland mitigation for the project that would fill about 10 acres adjacent to the refinery, local company officials appeared before the city’s Plan Commission last week and received preliminary approval to vacate streets and alleys between 52nd and 56th streets from Catlin to Weeks avenues. The streets and alleys don’t exist but are platted, and could complicate setting aside land for conservation, Podratz said. He said Murphy Oil purchased the Kimmes property north of 58th Street once considered for housing development.

The U.S. Corps of Engineers hasn’t approved the mitigation plan and the company is still working with the Wisconsin Department of Natural Resources to get the necessary permits, with a goal of beginning construction this year, Podratz said.

That would expand on about $100 million in upgrades to the facility over the last few years, said Mayor Dave Ross.

Last year, Murphy Oil invested $50 million to ensure the refinery could meet environmental standards for fuel by reducing sulfur content in diesel and benzene in gasoline.

After the board of directors’ announcement, local officials were quick to form a working group to monitor the sale and assist a new owner if needed.

State Rep. Nick Milroy, D-South Range, said he has also spoken with the Wisconsin Department of Commerce, which will provide whatever assistance it can to maintain the local refinery – an important part of the regional and state economy.

After listening to a Web cast of the announcement Friday morning, Development and Government Affairs Director Jeff Vito said he was concerned, but not alarmed by the decision.

Wood said the company had received inquiries about its refining operations before deciding to sell.

“I took out of that session … that they’ve been talking to some interested parties already,” Vito said. “They are probably pretty far down that path would be my guess if they’re going to try to get this thing completed by the first quarter of ’11. But I’m looking at it that this could be a real opportunity for this refinery.”

After all, Murphy Oil had contemplated a nearly seven-fold expansion of the Superior refinery, a proposed expansion that ended when Murphy Oil struggled to find a partner to secure an oil supply. According to the interim manager, Jim Kowitz, who served at the Superior refinery in 2008 when that exploration ended, the $6 billion project would have cost the company half its capitalized value.

A company the size of Murphy Oil faces significant challenges to put together the capital for a major expansion, Vito said. A company larger than Murphy would have a better ability to put that package together.

Vito said the Superior refinery is a strong candidate for that type of expansion because of its location.

“A lot of the work they [Murphy Oil] has done to go down that path could be very attractive to a company,” Vito said.

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