Holly Corp., the owner of refineries in New Mexico and Utah, anticipates the cost of expanding its Navajo refinery to increase 6.7 percent to $240 million.

The project's estimated price tag had been $225 million, the Dallas-based company said Tuesday in a statement.

Holly expects to increase the combined daily production capacity of its two refineries 18 percent to 131,000 barrels per day by 2009. The plants in Navajo, N.M., and Woods Cross are now capable of processing 111,000 barrels of crude.

"The additional $15 million reflects the increased cost of materials, such as steel, and labor, being experienced throughout the energy industry," said Ann Kohler, an analyst at Caris & Co. in New York.

Holly fell 7 percent, or $3.44, to $45.65 in New York Stock Exchange composite trading. That's the biggest one-day decline since July. The company has dropped 11 percent this year.

The company said it anticipates spending $749 million on capital improvements through the end of '09.