Utah oil company plans Wyoming plant

A Utah-based oil company announced Tuesday that it has signed a letter of intent with an unnamed Denver company to construct a $15.5 million oil topping refinery in Wyoming.

Michael Williams, chief executive officer of Interline Resources Corp. in Alpine, said he has all the necessary permits from the state of Wyoming to convert an existing natural gas processing plant to an oil refinery, which will specialize in producing off-road diesel and a specialty gasoline product used as a blending ingredient for fuel grade ethanol.

The 4,000-barrel-per-day refinery will operate as NorthCut Refining LLC in Douglas, Wyo., and is expected to start operations in early 2008.

The refinery is located near massive coal reserves of Wyoming's Powder River Basin, where industrial vehicles used in mining operations are powered by off-road diesel fuel.

In addition, the refinery's location is near Nebraska's corn belt and ethanol plants, Williams said.

"It's a new refinery that is going to add new capacity, which should help to alleviate part of the supply problem," Williams said. "Even though this is small, it's in the right place in Wyoming."

Williams said the new refinery will process Wyoming sweet crude oil, which typically sells below the price of New York Mercantile Exchange indexed crude oil. He estimates that the refinery will gross more than $100 million per year in revenues.

"The only reason our refinery can exist is because we're able to make this special product for the ethanol plants," Williams said. "Ethanol is here to stay. It's not going away."

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