Arizona oil firm optimistic despite Mexico's refusal to supply planned Yuma refinery
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Mexico's government-run oil company told an Arizona group that it will not commit crude-oil supplies to the local company's planned 150,000-barrel-a-day refinery east of Yuma.
Without a source of oil, Arizona Clean Fuels Yuma won't be able to raise money to build the $2.5 billion refinery.
"It's a Catch-22," said Ian Calkins, spokesman for the Phoenix-based group. "In order to give our investors some certainty, we need a contract in hand. Since we've been unable to get that to date from Mexico, we must seek other alternatives."
Petroleos Mexicanos is unwilling to tie up its limited oil supply for a yet-to-be-built refinery, Calkins said.
The Mexican oil company did not rule out the possibility of eventually striking a deal with the Arizona group, possibly after Mexico expands production by tapping offshore reserves.
Despite the setback, Arizona Clean Fuels officials remain optimistic that the group can create the nation's first new refinery in three decades.
Arizona Clean Fuels is also negotiating with Canadian oil interests, including suppliers of the oil and tar-sand deposits located mainly in Alberta. The oil would be shipped along the West Coast to a pipeline terminal in Baja California, then sent through a planned Mexico-to-Yuma County pipeline.
Securing oil is one of several tasks Arizona Clean Fuels faces. The oil firm must complete the purchase of the Tacna-area site from the Wellton-Mohawk Irrigation District, secure right-of-way easements to build a Yuma County-to-Baja California pipeline, and complete design and engineering plans.
The group's most significant milestone is being granted an air-quality permit in May from the Arizona Department of Environmental Quality. It's the only proposed refinery in more than three decades to obtain such a permit.
Yet the delays in securing oil could put that permit in jeopardy, or at least require the local group to file more paperwork to keep it valid.
Arizona law requires the group start construction by mid-November to keep the permit. That won't happen, so Arizona Clean Fuels plans to reapply for the permit soon to gain another 18 months to start construction.
"The permit was just issued, the technology is still the same and the community in Yuma is still very supportive of this," said Steve Owens, ADEQ director. "There really isn't an issue with doing this again."
The proposed refinery has won strong support from federal, state and local officials, especially as the United States increasingly relies on imported gasoline to quench consumer demand. Petroleum analysts say the nation's strained refinery system is one reason for the recent rapid increase in gasoline prices. In just one month, the average price of a gallon of unleaded in Phoenix has surged 45 cents to $2.81, AAA Arizona reported Tuesday.
Among the officials who have pushed for a Yuma refinery is Gov. Janet Napolitano, who has made several calls to Sonora Gov. Eduardo Bours and other Mexican government officials on behalf of the Arizona group.
Arizona Clean Fuels already secured permission from Mexico's Secretariat of Energy to build the $650 million pipeline that would stretch across the Sonoran Desert to the coast.
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paul c.
Apr 20, 2006 @ 3:05pmAll they have to do is promise to hire illegals at their refinery, Mexico will give them all the oil they want. - Post a Comment »