Daily Independent (Ashland, KY)

February 5, 2013

'Other refinery'

mall operation in Somerset has been revived once again


The Independent

ASHLAND — Kentucky’s “other refinery” is back in operation. Here’s hoping it continues to refine oil products because there is a need for the United States to increase its refining capacity.

 Continental Refining Co. quietly began receiving crude oil and operating the small refinery in Somerset about four months ago, but company officials waited until Sunday to formally announce the plant is back in operation after being idle for three years. Owner Demetrios Haseotes told The Commonwealth Journal in Somerset the refinery is operating at about 35 percent to 40 percent capacity right now. Company officials expect the facility to operate at full capacity within six months.

This is not the first time the refinery has risen from the brink of extinction. The then-idle Somerset Refinery, which has a refinery capacity of 5,500 barrels a day and dates to the 1930s, declared bankruptcy in 2006, and in 2008 Michael Grunberg bought the ailing refinery for $2.2 million and reopened it in July 2009 as Somerset Energy. At the time, it had five employed, many of them former Somerset Refinery workers.

When the small refinery reopened in 2009, Grunberg and others boldly predicted not only would the revived operation be successful, but higher crude oil prices would encourage drilling for new oil wells along the Kentucky-Tennessee border. Oil from that region was the reason why the refinery was first built in Somerset. Owners of the refinery predicted it again would refine crude oil from the region,.

But things did not go as hoped. The reopened refinery soon ran into a series of financial problems and the revival of the oil drilling business along Kentucky’s border with Tennessee never materialized. The refinery closed in February 2010 after just seven months of operation.

Continental Refining purchased the refinery a little more than a year ago. The company has secured a contract with Sonoco Partners Marketing and Terminals to purchase oil products from the refinery. That contract greatly increases the odds of the reopened refinery being profitable.

 Marathon Petroleum operates the state’s only other refinery, but no one would confuse the small refinery in Somerset with the large refinery near Catlettsburg, which has a refining capacity of 233,000 barrels per day. Marathon’s refinery near the U.S. 23 exit on Interstate 64 provides some of the most stable industrial jobs in this region.

While the Somerset refinery’s capacity is just a tiny fraction of that of the Catlettsburg refinery, we cheer the reopening of the small refinery and hope the earlier predictions of it being a market that revives oil drilling in the region are finally realized. That not only would provide more jobs for the area but also help reduce — albeit slightly —  U.S. dependence on foreign oil.