Refinery cuts back to save on electricity

Associated Press

Soaring prices may cause other facilities to follow

BILLINGS - ExxonMobil Corp. has cut production at its refinery here because of skyrocketing electrical rates, and the three other refineries in Montana are considering similar cutbacks.

The decision to make gradual reductions was made last week, said Dale Getz, spokesman for ExxonMobil.

Overall electric rates recently have hovered between $300 and $600 per megawatt hour. Getz said that means ExxonMobil is paying anywhere from 10 to 100 times more for electricity to run its Billings refinery than it did last year.

If such high prices continue, the economic viability of a lot of businesses in Montana will be threatened, he said.

For competitive reasons, Getz would not say how much production is being reduced, what ExxonMobil is paying for electricity or who the supplier is. Despite the production rollback, he said, there will be no layoffs among the refinery's 250 employees.

Nationwide, wholesale electrical rates have risen because supply hasn't kept pace with demand. California, which like Montana deregulated its system, hasn't built a new power plant in a decade. Also, a drought in much of the Northwest has reduced the amount of water for generating hydroelectric power.

The Montana Refining Co. near Great Falls has already cut its production because of high electric rates. That refinery employs 85 full-time people and about 20 temporary workers.

"We have done some production cutbacks and we have looked at the possibility of doing some short-term shutdowns," said marketing manager Mike Dusterhoff. He said his refinery considered more cutbacks two weeks ago, but decided to wait.

The other two refineries in the state, both in the Billings area, also are cutting costs, although they are not cutting production or laying off workers.

Ron Pletcher, manager and vice president of refining at the Cenex Refinery in Laurel, said the cooperative has reduced energy consumption in several ways, and is looking at more cuts in the face of what he called "extremely alarming" prices.

"We haven't curtailed production yet, but that is continuously under evaluation," he said.

The refinery has a relatively favorable energy contract now, but it expires next year, he said.

Conoco Inc. also is cutting costs at its Billings operation. Like the other two refineries, no layoffs are planned. Refinery manager Jay Churchill called the current wholesale electrical rates "crazy and troublesome."

The refinery is cutting costs and considering adding diesel generators to provide power short-term. Long-term, the refinery is looking at building gas-fired turbines or co-generation facilities to generate power.

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-- Martin Thompson (mthom1927@aol.com), December 18, 2000

Answers

"The refinery is cutting costs and considering adding diesel generators to provide power short-term. Long-term, the refinery is looking at building gas-fired turbines or co-generation facilities to generate power."

This one really troubles me, Martin. Co-generation facilities have been a mainstay of many huge refineries for years in the eastern and southern parts of our country. Even our local paper mills have their own co/gen facilities here in Va.

Could it be the dams on the Columbia and Snake river (built at U.S.public expense)have provided cheap power for so long, these refiners never considered using their own production of fuel to provide co/gen. And there was also the time they burned off the gas rather then use it for co-gen.

Last year with Y2K concerns, it was often stated if a refinery went down durning extremly cold weather, it would take 2 or 3 months to bring her back on line. Doesn't make sense to me not to have co/gen in place.

You may not have any more answers than I do, but I look forward to your posts. Thanks, Tommy R...

-- Tommy R... (tommy_r2000@my-deja.com), December 18, 2000.