Paramount Petroleum Corp.

Refining momentExecutive vice president Jimmy Crosby tells Gary Toushek how Paramount PetroleumÔÇÖs investment in technology expanded its capabilities to produce clean car, diesel and jet fuel. Can you imagine what itÔÇÖs like operating an oil refinery in California today? How about on the coast, in the south end of Los Angeles County? You would expect strict state and EPA regulations regarding emissions.  The reality is that, although those bodies do impose environmental legislation and California is a bit stricter than other states, it actually comes down to the local level. ÔÇ£ItÔÇÖs more a matter of stakeholder involvement, such as the local air control agency, local government, and the community; everyone participates in the process,ÔÇØ says Jimmy Crosby, executive vice president of Paramount Petroleum Corp., in the city of Paramount, not far from Long Beach.The refinery was originally built in the 1940s, expanded in the 1960s, and purchased in August 2006 by Dallas-based Alon USA Energy, Inc., which a month later also acquired another, smaller refinery, Edgington Oil Company, in Long Beach. Alon is a publicly traded independent refiner and marketer of petroleum products; it owns and operates two other sour and heavy crude refineries in Texas and Oregon. Paramount and Edgington are only a few miles apart and will be linked by pipelines that will effectively enable the two refineries to operate as one. Quite significantly, Alon is investing $300 million over the next four years to add high-tech emission controls and increase the production of clean-burning transportation fuels.Prior to 2005, both refineries made various grades of liquid asphalt. Paramount is the largest supplier in the western US, from the coast to Nevada and Arizona. In 2005 equipment was restarted to gradually move Paramount to a hydro-skimming mode, which means producing diesel, gasoline and jet fuel. ÔÇ£Since then weÔÇÖve completed some projects, and now weÔÇÖre operating the refinery in a hydro-skimming mode,ÔÇØ says Crosby. ÔÇ£And the new technology weÔÇÖre adding will lower emissions and improve operating efficiencies. WeÔÇÖre not looking to increase our throughput capacity but rather our clean product production capacity. WeÔÇÖre keen on producing more clean-burning diesel. A typical refinery will produce 50 to 60 percent gasoline and 30 percent diesel/jet fuel; we will produce 25 percent gasoline and 50 percent diesel/jet fuel. By adding this high-tech equipment, our California diesel fuel and commercial jet fuel will be super-clean.ÔÇØ Currently Paramount produces five fuels: California gasoline, California diesel, EPA diesel, military grade jet and commercial grade jet. The refinery is also integrated into nine asphalt terminals, each of which has blending and storage capacity to produce multiple grades of asphalt, which is loaded into trucks for distribution in California, Oregon, Washington, Nevada and Arizona, mainly to large contractors, who mix it with aggregate for applying to roads. ÔÇ£We also have an environmentally friendly asphalt. Alon owns 50 percent of Wright Asphalt, and they use very finely ground up used tire rubber and incorporate it into asphalt. To look at it, you canÔÇÖt tell the difference, but the properties are so much better, plus itÔÇÖs a great way of recycling old tires,ÔÇØ he says. ÔÇ£We sell gasoline and diesel to local distributors, and we also sell some back to the majors.ÔÇØ Crosby has been in the petroleum industry since 1981; he started by working for Gulf Oil in Texas and eventually ended up at Alon. Other than the skyrocketing cost of oil, heÔÇÖs seen a lot of changes in the petroleum business, many of them in technology. But to him the biggest change has been how the people who work in a refinery have reached out to the community so that the refinery becomes part of the community. ÔÇ£Any manufacturing company deals with the operation inside your fence,ÔÇØ says Crosby. ÔÇ£You know your operation, youÔÇÖre concentrating on it, and you donÔÇÖt spend much time understanding how it impacts your neighbors. IÔÇÖve seen the whole refining business remain expert on their operation inside the fence, at the same time broadening their horizons on meeting the expectations of their neighbors in an effort to become more a part of the community. When youÔÇÖre not aware of what someone else is doing, thereÔÇÖs a tendency to expect the worst, especially in the oil business. ItÔÇÖs a matter of communicating and putting a face to the business, so we say we may be working inside a refinery, but weÔÇÖre people just like our neighbors. ItÔÇÖs understanding everybodyÔÇÖs viewpoint. Everyday we come to work; we strive to produce clean fuels in a safe manner, while meeting the expectations of the community, local government, and the agencies in a partnership, while growing the business for our shareholders.ÔÇØ ┬áCrosby says one of the biggest challenges facing the oil business is a lack of workersÔÇönot only younger ones, but the generational gap between ages 30 and 50. Older workers are being asked to do more mentoring of younger workers. ÔÇ£WeÔÇÖre trying to bring in younger people who are somewhat mechanically oriented and train them in the basics, then pair them up with older workers who can share their experience. We have a formal continuous training program that builds on the experience that is shared by their mentor. ÔÇ£First we have to convince them to get into this field,ÔÇØ Crosby continues, ÔÇ£then convince them thereÔÇÖs a future in it. TheyÔÇÖre usually good at computers and such but lacking in most mechanical skills. WeÔÇÖre also trying to work with local schools to develop courses to teach students the basics. Personally, I like building an organization and seeing it work properly, getting people from different backgrounds to communicate and get the job done.ÔÇØ He sees programs such as lean manufacturing, six sigma, continuous improvement and so on, as more of a process that can be developed as part of a companyÔÇÖs culture. ÔÇ£To me, continuous improvement is a way for a manufacturing plant to build a culture. We use process controls to measure ourselves; itÔÇÖs geared toward a more balanced scorecard.ÔÇØCrosby hopes to have the new process units up and running by the end of the first quarter of 2011 and acknowledges that ÔÇ£one of the biggest unknowns for the future is how the carbon dioxide emissions issue will end up affecting us in the industry, especially when you consider that refineries donÔÇÖt produce very much greenhouse gasÔÇöitÔÇÖs a matter of how efficiently we can use carbon-based energy.ÔÇØ