HAMMOND | Motorists should see some relief at the gas pumps when the massive $4.2 billion modernization project at the BP Whiting Refinery is completed by the end of the year.
The refinery is the largest in the Midwest, but it only has been running at about half of its capacity while thousands of workers upgrade it to process a wider variety of fuels, said local BP official Thomas Keilman. Production will ramp up as the construction winds down, and an increased supply of gasoline should affect gas prices.
Keilman told about 300 members of the Lakeshore Chamber of Commerce at its annual BP luncheon Thursday that gas prices have been so high in the Midwest as of late partly because the Whiting refinery has been producing less gasoline during the project, which involved the largest private sector investment in state history.
"Refineries are going to slowly start upping production of gas and diesel supplies to the Midwest, and that should help to ease the price situation, given all other things are equal and there are no other refinery outages," he said.
Keilman gave an update on the project, which started in 2007 and put as many as 14,000 people to work during the economic downturn. Construction workers added a new crude distillation unit, a new coker and a gas oil hydro treater.
That equipment is crucial because the 125-year-old refinery had been configured to process sweet crude oil, but supplies of that fossil fuel have been diminishing, Keilman said. BP is investing in the capacity to refine heavy crude oil, which has experienced a rapid growth in production in the United States and Canada in recent years.
"The key here is that we're switching the refinery and sustaining the refinery for the next generation, for the next 25 to 30 years," Keilman said. "It gives the refinery more flexibility to refine a variety of different crudes."
Construction is more than 90 percent complete on the project, and BP has been focusing for the last year on training the refinery's employees on simulators so they can learn the new processes.
The number of construction workers on site has dropped to about 10,000. That employment level should remain fairly steady until the job is done, Keilman said.
The refinery modernization was as large as 10 big construction projects put together, and local contractors won't be nearly as busy once it's done, said Thomas Muchesko, senior vice president of Portage-based Graycor Industrial Constructors Inc.
"It was a mega-project," he said. "We've never seen anything that big before, and likely won't see anything that big again."