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Report on in-state refineries available Econ One discusses markets, investments, product types for Tesoro refinery at Nikiski, Petro Star plants at North Star, Valdez TIM BRADNER Petroleum News
A report submitted to the state Department of Natural Resources on status of Alaska’s refining industry is chock-full of information on the economics of refining in the state, the economic contribution of the state’s three operating refineries make and problems the industry faces.
The report, “The State of Alaska’s Refining Industry,” was compiled by Econ One Research Inc., a consulting firm, and submitted last December, but was little publicized.
The Senate Finance Committee of the state Legislature requested the report in 2014. It is on the Division of Oil and Gas website at: dog.dnr.alaska.gov/Commercial/RoyaltyOil.
Although it is now several months old much of the information is still relevant.
Three operating refineries Alaska’s three operating refineries including Tesoro Corp.’s plant at Nikiski and two Petro Star Inc. plants at North Pole, near Fairbanks, and Valdez, are described as to the types of products they produce and investments made by the owners.
Econ One describes the refined products market in Alaska including how much of the market the Alaska plants supply. Price differences of products in Alaska compared with the Pacific Northwest, a matter of continuing interest in Alaska, are also discussed in the report.
For example, retail gasoline prices in Anchorage in 2014 averaged 36 cents a gallon higher than Seattle-area prices although the cost of transporting gasoline to the state averaged only 25 cents a gallon that year, Econ One wrote in the report.
Large bulk purchasers of gasoline, however, were able to buy quantities of the fuel that were close to the cost of importing the gasoline, Econ One said.
Gasoline accounted for only 15 percent of the demand for fuels in 2014, the report said.
Jet fuel more competitive In contrast to gasoline, jet fuel purchasers were able to buy their products at an average of 5 cents a gallon over West Coast jet fuel prices, mainly because large-volume jet fuel buyers, such as air carriers, have the ability to import and store large volumes of fuel they own.
That creates a more competitive market than with gasoline, where the refiners and fuel marketers own and control the storage capacity.
Alaska jet fuel purchasers also import quantities of fuel from Asia, where it is cheaper than the U.S. West Coast and can also ship fuel from Asia to Anchorage at less cost than from the Pacific Northwest, Econ One said.
That’s mainly because product tankers operating to and from foreign ports are exempt from the U.S. Jones Act, a federal law that requires cargoes carried between U.S. ports to be in U.S.-built vessels.
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