2020-HFC-Annual-Report.Pdf
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2020 ANNUAL REPORT REFINING MID-CONTINENT WEST EL DORADO REFINERY NAVAJO REFINERY • Located in El Dorado, Kansas • Located in Artesia, New Mexico, and • 135,000 BPD capacity operates in conjunction with a refining facility 65 miles east in Lovington, New Mexico • Processes sweet and sour domestic and heavy Canadian crude oils into high-value • 100,000 BPD capacity light products • Processes sour crude oil into high-value • Distributes to high-margin markets in light products Colorado and Mid-Continent/Plains states • Distributes to high-margin markets in Arizona, New Mexico and West Texas TULSA REFINERY • Located in Tulsa, Oklahoma WOODS CROSS REFINERY • 125,000 BPD capacity • Located in Woods Cross, Utah (near Salt Lake City) • Processes predominantly sweet crude oil with up to 10,000 BPD of sour • 45,000 BPD capacity Canadian crude oil • Processes regional sweet and • Distributes to the Mid-Continent states advantaged waxy crude • Distributes to high-margin markets in MID - CONTINENT SALES OF REFINERY Utah, Idaho, Nevada, Wyoming and PRODUCED PRODUCTS 248,320 BPD eastern Washington The Mid-Continent Region comprises our El Dorado and Tulsa refineries and has a WEST SALES OF REFINERY PRODUCED combined crude oil processing capacity PRODUCTS 143,350 BPD of 260,000 BPD. The West Region comprises our Navajo and Woods Cross refineries and has a crude oil processing capacity of 145,000 BPD. In addition, we manufacture and market commodity and modified asphalt products throughout the Southwest states. Crude and Feedstocks Sweet crude oil 58% Sour crude oil 19% Heavy sour crude oil 17% 58+19176 Other feedstocks and blends 6% Crude and Feedstocks Sweet crude oil 30% Sour crude oil 49% Black wax crude oil 11% Product Mix 30+4911+10 Other feedstocks and blends 10% Gasoline 52% Diesel fuels 34% Jet fuels 4% Base oils 4% 52+34+43 Other 3% Product Mix Asphalt 3% Gasoline 56% Diesel fuels 35% Other 5% 56+3554 Asphalt 4% MIDSTREAM LUBRICANTS HOLLY ENERGY HOLLYFRONTIER LUBRICANTS PARTNERS, L.P. AND SPECIALTY PRODUCTS Holly Energy Partners owns and HollyFrontier Lubricants & Specialty Products operates substantially all of the (HFLSP) produces base oils and other specialized refined product pipeline and lubricants in the United States, Canada and the terminalling assets that support our Netherlands, exporting products to more than refining and marketing operations in 80 countries worldwide. In addition to specialty the Mid-Continent, Southwest and lubricant products produced at our Tulsa Refinery, Rocky Mountain geographic regions HFLSP includes operations in Mississauga, Ontario, of the United States. Petrolia, Pennsylvania, Council Bluffs, Iowa and the Netherlands. Products are marketed under the Petro-Canada Lubricants, Sonneborn, Red Giant Oil and HollyFrontier Specialty Products brands. APPROXIMATELY 3,400 MILES The Mississauga facility produces automotive, of Crude Oil and Petroleum industrial and food grade lubricants, greases, base Product Pipelines oils, process oils and specialty fluids. It is one of the largest manufacturers of high margin Group APPROXIMATELY 15 MILLION III base oils in North America. These products are Barrels of Refined Product and Crude marketed worldwide to a diverse customer base, Oil Storage in virtually every industry, through a global sales force and distributor network. 9 TERMINALS AND 7 LOADING RACK FACILITIES Facilities in Petrolia and the Netherlands produce specialty hydrocarbon chemicals such as white REFINERY PROCESSING UNITS oils, petrolatums and waxes for the personal care, in Woods Cross, Utah and cosmetic, pharmaceutical and food processing El Dorado, Kansas industries. Combined with Mississauga, we are one of the world’s largest producers of pharmaceutical 75% JOINT-VENTURE INTEREST white oils. in the UNEV Pipeline – A 427-mile refined products pipeline system The Council Bluffs facility produces both single connecting Salt Lake area refiners to and multi-grade oils and offers a range of value- the Las Vegas product market added services and solutions for customers in the railroad industry. 50% INTEREST in the Cheyenne Pipeline – An 87-mile The Tulsa Refinery produces base oils, specialty crude oil pipeline from Fort Laramie, process oils, horticultural oils, asphalt modifiers Wyoming to Cheyenne, Wyoming and wax. Products are marketed worldwide through strategically located terminals in the 50% INTEREST United States, as well as our comprehensive in the Osage Pipeline – A 135-mile distributor network in North America. crude oil pipeline from Cushing, Oklahoma to El Dorado, Kansas 50% INTEREST 5TH-LARGEST in Cushing Connect – A joint venture Base Oils Producer in North America formed for (i) the development, construction, ownership and operation 35,000 BPD of a new 160,000 barrel per day Lubricants And Specialty Product common carrier crude oil pipeline that Production Capacity will connect the Cushing, Oklahoma crude oil hub to our Tulsa Refineries 9% and (ii) the ownership and operation of North American Base Oil Production of 1.5 million barrels of crude oil storage in Cushing, Oklahoma Spokane PADD 4 Fargo PADD 5 Boise Minneapolis Casper Guernsey Mountain Home Sioux Falls Mississauga SLC/FRONTIER PADD 2 PADD 1 CHEYENNE Chicago Petrolia Sidney Des Moines SALT LAKE CITY Omaha Council Bluffs UNEV PIPELINE Denver Topeka Cedar City Kansas City Las Vegas St Louis SONNEBORN Bloomfield EL DORADO Springfield Osage Catoosa Moriarty TULSA Rogers Cushing Oklahoma City Albuquerque Phoenix Duncan Little Rock CENTURION Wichita NETHERLANDS ARTESIA ROADRUNNER Falls HQ Tucson Abilene UK El Paso Big Spring Joshua Amsterdam Midland Orla PADD 3 BELGIUM GERMANY HFC RENEWABLE DIESEL FACILITY HFC REFINERY + HFLS HEP TERMINAL/ HFC PRODUCT HEP PRODUCT HEP CRUDE CUSHING CONNECT PIPELINE CRUDE CRUDE REFINERIES Expected 1Q22 LUBE PRODUCTION LUBRICANTS FACILITY HFC PRODUCT MARKETS MARKETS PIPELINES PIPELINES Expected 2Q21 HUB GATHERING SHAREHOLDERS DEAR FELLOW SHAREHOLDERS 2020 was an the pandemic. I could not be more proximity of our four refineries to unprecedented year proud of this team as we continue to crude oil production basins with for HollyFrontier. In the support these efforts today. inland coastal crude discounts and face of extraordinary the ability to process various crudes challenges, even as the The impact of the COVID-19 pandemic and produce a high percentage of COVID-19 pandemic and on the global macro economy created gasoline, diesel fuel and other high reduced global economic unprecedented demand destruction value refined products. activity affected our for many of the transportation fuels, HollyFrontier continues businesses and our lubricants and specialty products Midstream: to benefit from Holly Energy Partners, daily lives, HollyFrontier we provide, as well as the associated L.P.’s (HEP) strong and stable cash persevered and took transportation and terminal services flow stream. HEP’s system of crude important steps to strengthen our we offer. As a result, volumes and pipelines, storage tanks, distribution business and extend our long record of unit margins across our businesses terminal and loading rack facilities value creation. declined in 2020, resulting in lower gross margins and earnings. We saw are positioned near HollyFrontier’s We controlled what we could, focusing an improvement in demand for our refining assets in high growth on the fundamentals of our business, essential products in the second half of markets. In 2020, HEP achieved maintaining a disciplined approach to 2020 and believe demand will recover strong volume performance, driven capital allocation and continuing our to normalized levels in 2021. by its oil pipeline systems in Wyoming efforts to further enhance reliability, and Utah, as well as its UNEV product safety and efficiency. We made key With respect to the calls for social pipeline. Throughout the year, HEP investments in renewable initiatives justice, like many companies, provided stability through its steady that will enable HollyFrontier to HollyFrontier recognized the need financial contribution and made capture new opportunities as our to look internally and assess whether progress on the expansion of its industry evolves. We ended the year we as a company are providing the Frontier/SLC crude system. with a strong balance sheet, healthy leadership and real opportunities Additionally, 2020 saw the liquidity and high-quality assets that are expected of a company like commencement of field construction that position us to capitalize on our HollyFrontier. We have prioritized our on a new 160,000 barrel per day competitive advantages. Looking diversity efforts in terms of recruiting crude oil pipeline that will connect ahead to 2021 and beyond, I believe and hiring, and have also recently the Cushing, Oklahoma crude oil hub that HollyFrontier is well-positioned added new diverse members to our to HollyFrontier’s Tulsa refinery. The for long-term success as our core Board of Directors. HollyFrontier is pipeline is owned by a joint venture businesses rebound and we continue proud of its increased diversity, from between HEP and Plains All American our expansion into renewables. our boardroom to the field, and we are dedicated to continuous improvement Pipeline LP. The joint venture also on this front. owns and operates 1.5 million barrels MEETING THE of crude oil storage in Cushing, CHALLENGES OF 2020 supporting HollyFrontier’s Tulsa and Beyond the progress we are making OPERATIONS El Dorado refineries. with our business, I’m incredibly Despite the market environment,