Texan Devere Bigelow, a Green River native, and partner Wayne Heftye of Sante Fe, N.M., purchased the mothballed refinery 18 months ago for $500,000. Since then, they have quietly gone about refurbishing the facility and have had preliminary discussions with the state about securing the permits necessary to return the refinery to production.

Instead of processing used oil, though, Bigelow and Heftye say they intend to refine "black-wax crude" from the Uinta Basin into diesel fuel and gasoline. It is an ambitious plan fraught with uncertainties, but one that is being cheered by state officials and oil industry executives.

"There is a lot of black-wax crude getting produced in Utah that has nowhere to go," Bigelow said. "The refineries in Salt Lake will accept only a limited amount, so we will be well-positioned to take advantage of that supply."

An additional refinery in Utah would help increase gasoline and diesel fuel supplies for the state's motorists, potentially lowering the price. It also would increase state revenues if oil producers, many of whom pay royalties to the state for the crude recovered from public lands, have another place to sell their product and step up their production as a result.

Black-wax crude comes out of the ground at a consistency similar to petroleum jelly. It is thick and viscous, and unlike the "light sweet crudes" that are popular feedstocks for refineries, black-wax crude usually isn't transported by pipeline. It needs to be trucked in insulated tankers and must arrive at its destination within four to eight hours or it will solidify. If that happens, the tanker's cargo must be warmed up before it can be pumped out.

Less than 12 percent of the 175,500 barrels of oil that Salt Lake-area refineries process comes from black-wax wells.

Utah's refineries primarily are set up to run lighter, sweeter crudes, said Lee Peacock of the Utah Petroleum Association. "They take the black-wax to mix with their other feedstocks to help optimize their production," he said. "But there is substantially more black-wax out there than they can use."

And that is proving to be problematic for oil producers in the Uinta Basin such as the Ute Indian Tribe, whose lands hold a wealth of black-wax crude reserves.

Oilman John Jurrius, who oversees the tribe's finances and its Ute Energy oil business, said he recognizes the economics behind the decisions by the state's refineries to use only a limited amount of crude from the Uinta Basin.

"Someone has to resolve the problem" of a lack of refining capacity for black-wax crude in the state, he said. "And it should be a concern for everyone. We hear about the future lying with tar sands and oil shale, but we can't even refine the existing product we have in the state."

The Ute Tribe is exploring whether to construct a refinery of its own, Jurrius said. "We've been working on engineering designs and permitting. We're well down the road."

Still, he said, the tribe welcomes the prospect that EcoDomaine soon could be able to open the refinery in Green River and begin processing black-wax crude. "It's an awfully small refinery, but we'll support anyone that wants to help support our businesses."

EcoDomaine principal Heftye said the company initially plans to process 2,000 barrels to 3,000 barrels of crude a day in Green River but within a year or two ramp up to as much as 18,000 barrels.

"And once we reach that point, we'll be able to soak up like a sponge most of the black-wax crude that's available," he said.

EcoDomaine executives have been talking with state environmental officials for months about securing the necessary permits for the plant.

Don Peters, who serves as EcoDomaine's operations supervisor in Green River, said the company will be relying heavily on the fact that the refinery's previous owners - Book Cliffs Energy and later Coyote Oil - had the necessary permits to operate on the site.

"We'll be seeking to modify those existing permits rather than trying to get new ones. We believe that significantly will shorten the time frame for permitting. Although we still have a lot of work to do at the refinery, we're hoping that we can begin processing within the next few months."

But Rusty Ruby, a manager at the Utah Division of Air Quality, isn't so sure.

"They're still going to need an air-quality permit. And even though they may want to modify an existing permit, the steps they will need to take to secure a permit are pretty much the same."

A lot will depend on the quality of information the company submits to the state, Ruby said. "And I haven't seen anything from them yet, so it is difficult to say how long the process might take."

In the meantime, some black-wax crude producers in the Uinta Basin are curtailing drilling more wells and some are idling existing wells because of the oversupply of the crude and the low price that refineries are willing to pay for it.

Jurrius noted that two years ago refineries were willing to buy black-wax crude for a few dollars a barrel less than what they would pay for the lighter, sweeter feedstocks. "Now that $2 to $4 differential has widened to around $14 a barrel," he said. "This isn't a real efficient market right now."

He said the problem started to about two years ago when lighter crudes from Canada began flowing south over pipelines into the Salt Lake Valley. At the same time, producers in the Uinta Basin were ramping up their own production, hoping to take advantage of the rising price of crude on world markets.

John Baza, director of the state's oil and gas division, said the talk of producers idling wells is an appropriate response to a fluctuating crude oil market. "If the producers aren't getting the price they need, then they need to make some decisions. If the market demands that a new refinery be built, some will put the thought, effort and money to get it done."

EcoDomaine maintains it is ready to go.

And Les Thompson, who previously worked as the refinery manager for Book Cliffs Energy in Green River, said he will be back in place once processing begins.

"When they [EcoDomaine] called and said they'd like me to go to work for them, there was one condition: I told them I'd do it only if they weren't planning on refining used oil," Thompson said.

He said there were way too many problems with using used oil as a feedstock. "It seemed that almost as soon as you'd get the refinery up and operating, it would go down again for one reason or another."

Black-wax crude is different, he said "This refinery can handle that real well. It will run real efficiently."

steve@sltrib.com

What is black-wax crude oil?

* Black-wax crude is thick and viscous and comes out of the ground at a consistency similar to petroleum jelly. It is trucked in insulated tankers and must arrive at its destination within four to eight hours or it will solidify. If that happens, the tanker's cargo must be warmed up before it can be pumped out.