Investing in a secure future
The Economic Impact of the Wood River Refinery Expansion on the River Bend Region
RiverBend launches world-class expansion
Two of world’s top oil companies invest $3 billion in local refinery
ConocoPhillips based in Houston, Texas and EnCana Corporation of Calgary, Alberta have formed a partnership and are investing $3 billion in the WRB Refinery, located in Roxana, Illinois. The facility is currently the tenth largest in the United States producing over 10 million gallons of fuel each day. The expansion will increase crude oil processing from 306,000 barrels per day of crude oil to approximately 360,000 barrels per day and increase daily production of clean fuels to 13 million gallons. The expansion is expected to make the refinery the sixth largest in the nation by 2011. The RiverBend region is already a great place to live and work. With the refinery expansion, the region’s 300,000 residents look forward to increased financial security. The project will: • Generate $325 million in local construction income and $48 million in annual ongoing income • Create close to 4,000 jobs during construction and over 500 long-term jobs in the community • Result in $14 million in local and state tax revenue during construction and nearly $19 million once the facility is operational Local construction expenditures during the expansion will total approximately $1.2 billion with a total economic impact of $1.5 billion. Once operational, the project will have an ongoing economic impact in the RiverBend of about $1.9 million.
2009 $922,521,173 4,115 $325,252,121 $14,766,527 2010 $540,056,348 2,427 $190,391,402 $8,941,980 2011 $1,886,688,881 542 $48,404,890 $18,894,641
Total Anticipated Economic Impact
2008 Output Jobs Income State & Local Taxes $75,132,221 318 $26,503,435 $932,205
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ConocoPhillips develops a clean fuel from a secure source.
One of the most stable supplies of crude oil for the future of the United States comes from North America. Canada’s oil resources are enormous, second in the world only to Saudi Arabia. Canadian crude is heavier and harder to refine than Middle Eastern crude. So ConocoPhillips invested in the development of a delayed coking technology to process this crude and help insulate the country from international market swings. The company chose the RiverBend refinery to implement the new technology. The Wood River facility receives crude oil through pipelines. The plant converts the crude to gasoline, diesel fuel, asphalt, and jet fuel. The finished products leave the plant via rail, barge, truck and pipeline. Lambert and O’Hare airports receive jet fuel from pipelines. Following the expansion, the Wood River Refinery will help ConocoPhillips supply North American products through its nearly 10,500 retail and wholesale outlets around the world.
“The project is here at Wood River because of our staff’s performance. From the moment this facility became part of the ConocoPhillips portfolio, we have been recognized every year for outstanding performance. Our staff, like our community, has great pride in their accomplishments.” – Herman Seedorf, refinery manager
U.S. Refineries Ranked by Capability
Rank 1 2 3 4 5 6 7 8 9 10 Company Exxonmobil Refining and Supply Co. Exxonmobil Refining and Supply Co. BP Products North America Inc. Citgo Petroleum Corp. BP Products North America Inc. Exxonmobil Refining and Supply Co. Sunoco Inc. (R & M) Chevron USA Inc. Deer Park Refining Ltd Partnership WRB Refining LLC Location Baytown, TX Baton Rouge, LA Texas City, TX Lake Charles, LA Whiting, IN Beaumont, TX Philadelphia, PA Pascagoula, MS Deer Park, TX Wood River, IL
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Local construction impact: $1.5 Billion
The total cost of construction for the project is $3 billion. Between 2008 and 2010, roughly $1.2 billion is expected to go to local construction firms who will help expand the current facilities on the 2,200 acre Wood River Refinery, build a new vacuum unit and construct a new 300 foot tall steel coker which will process 65,000 barrels of heavy crude oil daily. Once the construction firms and workers spend their earnings, the total local construction impact (including indirect and induced impact) will total over $1.5 billion during the four-year building process. This includes: • $1.2 billion construction expenditures • $530 million increase in local income from related spending • $18 million increase in local and state tax revenue At its peak in 2009, this impact is expected to reach $900 million for the year, accounting for 3,819 jobs in the region and over $318 million of income. State and local tax revenue for that year is expected to reach $11 million.
Construction Impact
2008 Output Jobs Income State & Local Taxes $75,132,221 318 $26,503,435 $932,205 2009 $901,586,657 3,819 $318,041,224 $11,186,463 2010 $525,925,550 2,228 $185,524,048 $6,525,437
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CORE Project Director David Dimond inspects the progress of the heavy, steel coker foundation.
Traveling worker impact: $35 Million
A project of this scope creates many challenges. The demand for skilled labor is one of the biggest issues. While ConocoPhillips began working with the local union halls over a year and a half prior to the start of construction, thousands of workers will come from outside the region to work on the Wood River Refinery. They are expected to spend almost $21 million during their stay in the community. These highly-skilled craftspeople will have many needs. The refinery staff has even created a special website to provide visiting workers with a comprehensive listing of hotels, RV and trailer spaces, apartments, home rental options, restaurants, banks, and other services. At the peak of construction in the fall of 2009, there will be close to 3,000 traveling workers in the area. Their primary needs are expected to be housing, groceries, restaurants and miscellaneous retail items. The $21 million they spend on these purchases will: • Increase local income by $12 million • Create state and local tax revenue of $6 million • Generate 296 jobs at the peak of construction in 2009 During construction, the impact of the traveling workers’ spending in the region is expected to total over $35 million.
Travelers’ Impact
2009 Output Jobs Income State & Local Taxes $20,934,516 296 $7,210,896 $3,580,064 2010 $14,130,798 199 $4,867,355 $2,416,543
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Operations impact: $1.9 Billion per year
Once completed in 2011, the expansion will increase the output of the refinery by 3 million gallons of fuel per day and will add about 100 jobs. Besides the refinery’s employment and expenditures, there is an additional impact in the community from suppliers and the payroll generated at their firms as their employees make purchases as well. The economic impact of the expansion, once operational, will be $1.9 billion per year. Over 500 new jobs are anticipated in the region including those at the refinery. Income in the region is expected to increase by $48 million and state and local tax revenue is expected to increase by almost $19 million. The project will double heavy-crude oil refining capability and the refinery’s clean product yield will jump 10 percent to 89 percent, eliminating 40,000 barrels per day of low-value asphalt production. The investment at the refinery also includes many projects which will decrease overall refinery emissions from current day levels.
Operations Impact
2011 Output Jobs Income State & Local Taxes $1,886,688,881 542 $48,404,890 $18,894,641
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About the Region
In 1804 Lewis and Clark’s legendary expedition launched just a couple miles from the Wood River Refinery. Their efforts changed the nation by sparking interest in westward expansion. Two hundred and five years later, the RiverBend region is once again moving the nation into uncharted territory by launching a $3 billion North American energy expansion that could reduce the nation’s dependence on foreign oil. This is a journey that will happen locally. The rolling hills and bluffs along the Mississippi River have become home to engineers and refinery workers who will implement the ConocoPhillips ThruPlus® Delayed Coking Technology to process North American crude. The outlook for job creation for the community is very positive according to Herman Seedorf, refinery manager. It is a good location for other business development as well. Businesses like ConocoPhillips who choose to build their companies in the RiverBend find: • A ready workforce • Low cost of living and reasonable wage expectations • Great ground, water and air transportation – Large, top certified local airport – 30 minutes from Lambert International Airport • One of strongest logistical and warehousing hubs in the United States • Excellent quality of life with options for both urban and rural living For information on commercial and industrial properties, visit www.riverbendprospector.com.
Macoupin Jersey Bond
Map of the Region
Lincoln
Calhoun
Warren
St. Charles St. Louis
Madison
St. Louis City St. Clair
Clinton
Franklin Jefferson Monroe
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Washington St. Francois
Methodology
This study, conducted by John Navin, Warren Richards and Timothy Sullivan of RSN Economic Group measured Economic Impact. That differs from Economic Activity because it only includes transactions that add to the output, employment, income and/or tax revenues of Madison and Jersey Counties. For example, if the refinery purchases $100,000 worth of material from a supplier located outside the RiverBend region, the purchase would have no economic impact on the region. Purchases made in the area have a three-part economic impact on the economy: • Direct impact – a purchase in Madison or Jersey County impacts that county’s output, employment, income and tax revenue. • Indirect impact – expenditures for things like warehouse space, shipping and maintenance services the company needs to provide the product or services. • Induced impact – money spent by the employees of the supplier spent in the community for things like groceries, clothes and entertainment.
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History/Future
ConocoPhillips is the second-largest refiner in the United States and the world’s fourth-largest nongovernment-controlled refiner. They have nearly 15,000 refining employees working at a total of 19 refineries around the world with 12 located in the United States. The Wood River facility has been in operation for over 90 years. It began operation in 1917 as the Roxana Petroleum Company, an affiliate of Shell Oil. In 1998 they operated under the Equilon name following a merger with Texaco that was then sold to Tosco in June of 2000. Tosco was purchased by Phillips Petroleum in 2001 and Phillips Petroleum merged with Conoco, Inc. the following year. In 2007, as a result of a joint venture with EnCana, Inc. the Refinery became the WRB Refining LLC Wood River Refinery. Close to 800 full-time workers and 200 contractors currently work to staff the Wood River Refinery round the clock to distill over 300,000 barrels of crude oil each day. With the crude oil they produce over 10 million gallons of fuel daily. This includes: • 6.3 million gallons of gasoline • 1.4 million gallons of jet fuel • 2.3 million gallons of diesel fuel • 38,000 barrels of asphalt
By building the special facilities to process the heavier Canadian crude, the refinery will provide a significant market for Canada’s abundant heavy oil resources and offer a stable, long-term supply to consumers in the United States. Once the Coker and Refinery Expansion (CORE) Project is completed, the facility will increase daily output of clean fuels by 3 million gallons and will increase employment at the refinery complex by 100 jobs. The Coker and Refinery Expansion (CORE) Project upgrade at Wood River is one of the largest refining projects in the United States and biggest refinery expansion in ConocoPhillips’ history.
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About the Authors
John C. Navin, Ph.D., is a faculty member in the Department of Economics and Finance at Southern Illinois University Edwardsville and Senior Research Economist with RSN Economic Group, Inc. His areas of expertise include public finance, health economics and labor economics. His research has been published in Economic Development Quarterly, The Southern Journal of Business and Economics, Public Finance Quarterly, Growth and Change, Public Budgeting and Finance, and International Review of Economics and Business. Warren D. Richards, M.S., is a faculty member in the Department of Economics and Finance at Southern Illinois University Edwardsville and President and Research Economist with RSN Economic Group, Inc. His areas of expertise include economic analysis and marketing research. His research has been presented at conferences and published in academic journals. Timothy S. Sullivan, Ph.D., is a faculty member in the Department of Economics and Finance at Southern Illinois University Edwardsville and Senior Research Analyst with RSN Economic Group, Inc. His areas of expertise include business forecasting and statistical analysis. His research has been published in Economic Development Quarterly, The Southern Journal of Business and Economics, The Public Interest and The International Review of Economics Education.
The areas of rolling hills and bluffs located on the north and east sides of the Mississippi River from Grafton to Hartford and South Roxana is known locally as the RiverBend, referring to the wandering course of the Mississippi River through the area. 5800 Godfrey Road - Alden Hall Godfrey, IL 62035 Phone: (618) 467-2280 Fax: (618) 466-8289 www.GrowthAssociation.com www.RiverBendProspector.com Email: info@growthassociation.com The RiverBend Growth Association is both the Chamber of Commerce and the Economic Development Organization for the communities of the RiverBend. As a Chamber of Commerce, we actively promote activities between our member businesses. As an Economic Development Organization, we work closely with state, regional, county and local officials to develop new employment opportunities. The mission of the Growth Association is to provide leadership required to attract, promote and support new and existing enterprise growth throughout the RiverBend community. This study was funded by the RiverBend Growth Association, ConocoPhillips Wood River Refinery and through a grant from the Illinois Department of Commerce and Economic Opportunity.
Design: Inlandesign Inc.
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