Owner Seeks to Expand Bakersfield Oil Refinery

With California fuel prices at record heights, Flying J Inc. has approved plans for a more than $500-million expansion at its Bakersfield refinery that would double the plant’s gasoline output as early as mid-2008.

The Ogden, Utah-based company, best known for its 178 truck stops, promised to increase the plant’s production when it bought the refinery from Shell Oil Co. last year. Shell had planned to shutter the plant, saying it was inefficient and not profitable enough, but was pressured into selling it instead.

Plant manager Gene Cotten didn’t return calls for comment Thursday, but he announced the milestone in internal meetings and an employee newsletter distributed this week.

“The Bakersfield refinery is set to embark on another evolution in the refinery’s long history,” Cotten said in the newsletter. “The clean fuels project ... has been given the final green light.”

Flying J hopes to obtain permits from the likes of the San Joaquin Valley Air Pollution Control District by the end of the year, Cotten said. Plans call for new equipment and upgrades that would increase the refinery’s oil-processing capacity and squeeze significantly more gasoline from each barrel of crude.

The Bakersfield refinery, which processes as many as 68,000 barrels of oil per day, makes about 2% of California’s gasoline supply and 6% of its diesel.

Cotten said he expected that the project would take 2 1/2 years to complete. Its cost will top $500 million, said an employee who asked not to be named. That is almost four times the $130 million Flying J reportedly paid Shell for the refinery.

The refinery purchase was a big step for privately owned Flying J, which also owns a tiny refinery in Utah.

Since taking over the Bakersfield refinery, Flying J has struggled through problems with crude oil supplies, labor friction and mechanical breakdowns.

However, California refiners such as Flying J have enjoyed record profits in the last two years as supplies have failed to keep pace with demand, helping to push up pump prices.