NEWELL-Ergon Inc. plans to expand its Newell refinery in the new year so that it can better handle the increased oil outputs from drilling activities in the Marcellus and Utica shales.
The expansion, to the tune of $78 million, mainly will increase the refinery's capacity to process regional crude oil by upgrading and adding equipment, company spokesman Jim Temple said.
"This expansion will provide our customers with even greater reliability, higher quality fuels and an improved customer experience," said Don Davis, president of Ergon-West Virginia Inc.
The Ergon-West Virginia Inc. oil refinery, located on state Route 2 in Newell, is scheduled for a major expansion next year by its parent company, Ergon Inc. of Jackson, Miss. (Photo by Stephen Huba)
The plant, which employs 180 people, is not planning to do any hiring to support its expansion, Temple said. "The expansion is primarily involving processing equipment in the plant," he said, including the addition of a storage tank.
Originally built in 1972, the refinery was bought by Ergon Inc. from Quaker State in 1997, according to the company's Web site. The plant has the capacity to process more than 20,000 barrels per day of Appalachian grade crude oil, which it gets from facilities in Ohio, West Virginia, Pennsylvania and elsewhere.
The plant uses high-pressure hydrotreating technology to process the oil, which is sold at the refinery rack or by barge within Ergon-West Virginia's regional market, according to the Web site.
The process and base oils refined in Newell are used in a wide variety of applications, including motor oils, gear oils, greases, pharmaceutical and agricultural spray oils, food grade applications and in high-temperature rubber applications, according to the Web site.
The expansion will be done in phases over the next two years, Temple said. The majority of the projects will be completed in the second quarter of 2013, with the balance continuing into 2014, he said.
"This will allow us to run some of the new crudes that are coming out of the (Marcellus and Utica) shales in that area," Temple said. "It allows our facility and our products to be more competitive."
This is the second time this year that Ergon Inc. has announced expansion plans for the Newell facility. In March, the company said it was adding storage tanks and infrastructure to the refinery and to two associated terminal facilities in Ohio.
Construction on that project is expected to be done in the first quarter of 2013.
The company also said it was expanding its logistics capabilities at Ergon-West Virginia and Ergon Trucking Inc., which has a terminal in Newell.