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Utah refinery growth promises jobs, revenue, but at what cost?
Energy » Expansion of refineries may bring more jobs and revenue to state, but neighbors fret about possible accidents and added tanker traffic.

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Jobs and revenue » Against the backdrop of the transportation, air quality and other issues, HollyFrontier refinery Manager Lynn Keddington said the first phase of the expansion project will add 40 more jobs to the plant’s 195-person workforce, whose average salary is $81,360.

It also will create more than 1,500 jobs in related work such as truckers, wildcatters and all the services they require. In addition, HollyFrontier will pay $64 million in state tax revenue, up from $32 million, and contribute $801 million to Utah’s gross state product, nearly double the current total. The numbers will only get better with the second phase, expected to be completed after 2016, he added.

To learn more

O The Utah Division of Air Quality has posted information about the Tesoro application and seeks public comments on the company’s plan through June 7. A public comment period on HollyFrontier’s application is expected to be announced in the next three months. Visit bit.ly/J9UBew

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"The expansion allows us to take advantage of Utah crude, creating more Utah jobs and state revenue — when the alternative is to buy Canadian crude with none of those advantages," he said.

About 72 percent of the crude oil consumed in Utah comes primarily from Canada, as well as Wyoming and Colorado. The state’s population growth will only put more pressure on oil imports. Based on increases in consumption during the past 10 years, petroleum-based transportation fuel use is projected to increase from 45 million barrels a year to 52 million barrels during the same period, according to the state’s Energy Initiatives & Imperatives report.

That could change as refinery row ramps up production. When completed, the refineries will take 99,000 barrels of Utah crude a day — up from 20,000 barrels six years ago.It’s difficult to say what the savings will be, but waxy oil typically costs around $10 less per barrel less than sweeter crudes.

HollyFrontier, based in Dallas, will invest $225 million during the next four years to increase production by 45 percent. San Antonio-based Tesoro Corp. expects to invest $180 million to increase processing capacity by 7 percent, and Chevron, based in California, has said it plans to spend $83 million upgrades to its Salt Lake refinery.

As part of its expansion, HollyFrontier signed a 10-year agreement with Newfield Exploration Co. to supply 20,000 barrels per day of Utah crude produced from the oil company’s Uinta Basin properties. Tesoro signed a similar supply agreement with Texas-based Newfield.

Newfield, by far the state’s oil production leader, plans to invest $500 million this year as it steps up its drilling and assessment operations. Last year, Newfield contributed 7.7 million barrels of black wax to the state total of 26 million barrels. Of the eight producers exceeding 1 million barrels, six pumped black or yellow wax exclusively.

John Baza, director of the Division of Oil, Gas and Mining, said there’s plenty of black wax in the Uinta Basin to sustain increased production for decades. "The question is if the refineries expand and the transportation problems are solved, how much more could you produce?" he asked.

Possibly millions more barrels of Utah crude.

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Tribune reporters Judy Fahys, Lee Davidson, Tony Semerad, Brandon Loomis and Pamela Manson contributed to this story.

Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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