BILLINGS -- Phillips 66 is spending several hundred million dollars on improvements to its Billings refinery. The project will generate hundreds of construction jobs for the Billings area over the next year and is part a trend in which companies are investing millions in Billings area refineries.
The "Vacuum Improvement Project" is underway and will continue into 2017. Company officials said an average of 200 construction workers will be on site, and the construction work force will peak at 350 workers. The refinery will continue to operate throughout the construction period.
Oil drilling activity in the United States has undergone a steep decline in the wake of falling prices resulting from a worldwide glut of crude. On Monday, the price of benchmark West Texas intermediate crude closed at $36.33 per barrel.
But Steve Arveschoug, executive director of Big Sky Economic Development, welcomed the investment in refinery improvements for a significant boost to the Billings economy.
"It keeps the folks in the trades employed, and it means business opportunities for suppliers," Arveschoug said. Between CHS and Phillips 66, more than a half-billion dollars is being invested in local refineries, he said.
Three oil refineries in the Billings area require regular upgrades and maintenance. In 2012, the Phillips 66 refinery — the company was then known as ConocoPhillips — completed another large project when it replaced a pair of coker drums.
This year, the CHS refinery in Laurel has been busy with a $405 million project designed to boost its diesel capacity. That project is to be completed by 2019.
In an emailed response to questions from a reporter, Phillips 66 officials said the Vacuum Improvement Project will allow the refinery to process more heavy Canadian crude oil. However, the refinery’s capacity won’t be increased.
“The Billings refinery currently processes a mixture of Canadian heavy, high-sulfur crude oil plus domestic high-sulfur and low-sulfur crude oils, all delivered by pipeline and truck. This project will allow us to handle up to 100 percent heavy Canadian crude,” Phillips 66 officials said.
Crude oil production in the United States has boomed in recent years, primarily because of oil shale plays like the Bakken formation in North Dakota. But the Phillips 66 refinerydoesn’t anticipate processing significant amounts of Bakken crude any time soon.
“While it’s technically possible for us to run Bakken crude oil, it is unlikely given the economics,” company officials said.