BP plans $3 billion investment in Indiana

SOUTH BEND -- BP will spend $3 billion to upgrade its oil refinery in northwest Indiana so it can process heavy Canadian crude oil, increasing its production of motor fuels at the site by up to 15 percent.\nThe move announced Wednesday by BP PLC's U.S. division was expected to create up to 80 new permanent full-time jobs and 2,500 temporary jobs during the three-year construction phase. The Whiting Refinery, about 10 miles from Gary, currently produces about 290,000 barrels a day of transportation fuels such as gasoline and diesel.\nMike Hoffman, BP's group vice president for refining, said the project will modernize the equipment at the refinery "and competitively reposition it as a top tier refinery well into the future."\nCal Hodge, president of A 2nd Opinion Inc., a consultancy in Houston that specializes in fuel and regulatory issues, said the upgrade will add production at the margins and as a result could have an impact on gasoline prices.\nHowever, Energy Department analyst Joanne Shore said the move wasn't likely to have a significant impact on gasoline prices. The cost of crude oil is a bigger factor in setting the price, she said.\nThe output from the Whiting Refinery accounts for a tiny fraction of the country's consumption. The U.S. refines more than 15 million barrels a day of crude oil, and it imports several million barrels a day of refined products.\nU.S. Energy Secretary Samuel Bodman said in July that production from Canada's vast oil sands deposits could have a "profound" effect on energy security in the United States.\n"It's a good move for the country because it will diversify energy supply," Hodge said. "It will do more for you than planting an ear of corn in Iowa and turning it into ethanol."\nConstruction was tentatively scheduled to begin in 2007 and be completed by 2011, pending regulatory approvals.\nThe investment increases the diversity of oil that can be refined in the Midwest, said Bob Malone, BP America Inc. chairman and president.\n"It also provides a significant market for Canada's abundant heavy crude oil resources," he said.\nThe Indiana Economic Development Corporation offered $450,000 in training grants and $1.2 million in tax credits based on job creation and capital investment to attract the project.\nAdditionally, the Indiana Department of Transportation and Indiana Department of Workforce Development will provide assistance with infrastructure improvements and worker training.\nGov. Mitch Daniels said the investment is the biggest in Indiana that he can remember.\n"It's going to create more construction jobs, 2,500 at the peak, than any project: bigger than the (Indianapolis Colts) stadium, bigger I'm sure than probably the Honda plant or any of the other steps along our recent hot streak," he said.\n"And on top of that it's a matter of national energy importance. We haven't built a new refinery in this country in a long, long time. It's been one of the reason for high gas prices"