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BP Whiting Heavy Crude Conversion to Reach Full Rates in 2014

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Feb. 5 (Bloomberg) -- BP Plc’s Whiting refinery in Indiana won’t be able to process heavy Canadian crude at full rates until 2014, Chief Executive Officer Bob Dudley said in the company’s fourth-quarter earnings call.

The largest crude unit at the refinery won’t come back online until the middle of 2013 after it was shut in November for an upgrade to process less-expensive heavy oil, Dudley said. The other units involved in the project -- a coker, gas oil hydrotreater and sulfur recovery unit -- will come online in sequence over the following six to nine months.

“We do anticipate 2014 will be the first year we get the full benefits of it,” Dudley said.

The completion of work on the 225,000-barrel-a-day crude unit, known as Pipestill 12, was pushed back to between June 1 and Aug. 15 from the original estimate of March, a person familiar with operations said Dec. 14.

Canadian producers are counting on the Whiting conversion project to help relieve a glut of crude in Alberta that depressed prices there $42.50 below U.S. benchmark West Texas Intermediate on Dec. 14.

If the refinery takes six to nine months to start the coker after the crude unit is back online, that will mean it runs more light, sweet crude and less heavy, said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research consulting company in London.

“This is more bearish for Canadian crude,” Sen said. “They thought they were going to be able to send their crude down to Whiting in Q3, now it’s going to be 2014.”

Western Canada Select oil in Alberta was at $28.75 below WTI at 12:08 p.m. New York time today, according to data compiled by Bloomberg.

To contact the reporter on this story: Dan Murtaugh in Houston at dmurtaugh@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net