DALLAS -- A new crude supply deal for Alon USA Energy Inc. could help speed the company's retail growth and provide relief in the case of an emergency supply situation such as that created by Hurricane Katrina last year.
Alon announced late last week that it has forged an agreement with Centurion Pipeline LP for a 15-year arrangement in which Centurion will provide Alon with a minimum of 21,500 barrels per day (bpd) of crude pipeline capacity from Midland, Texas, to Alon's Big Spring, Texas, Refinery. The arrangement is expected to become effective by [image-nocss] Aug. 14, 2006, subject to customary conditions including filing and approval of tariffs.
Alon has also agreed to ship at least 21,500 bpd on Centurion's reactivated pipeline including a newly constructed 12-inch pipeline leased from Alon. The agreement can be mutually extended for an additional five-year term.
We are very pleased to add this additional flexibility to our crude supply system for the Big Spring Refinery, said Jeff Morris, Alon's president and CEO. We now have three alternative supply sources to the refinery. In addition to the Centurion system, the Amdel pipeline system startup announced earlier this year, which has a current capacity of 27,000 bpd, will be able to supply up to 40,000 bpd by year end 2006 from either Midland or Nederland, Texas.
He added, The operation of the Mesa pipeline system which can fully supply the Big Spring refinery's crude capacity has been extended until the end of 2009. We now have in place an additional contingency should the Mesa pipeline system not operate beyond 2009. Thus, we believe these alternative options will be sufficient to supply the Big Spring Refinery's crude oil requirements for the foreseeable future.
Dallas-based Alon is an independent refiner and marketer of petroleum products, operating primarily in the southwestern and southcentral regions of the United States. It owns and operates a refinery in Big Spring, which has a crude oil throughput capacity of 70,000 bpd. It markets gasoline and diesel products under the FINA brand name. The company also operates convenience stores in West Texas and New Mexico under the 7-Eleven and FINA brand names and supplies motor fuels to these stores from its Big Spring refinery.
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