The Ute Indian Tribe has taken on an out-of-state partner to help it explore ways to take advantage of its rich black-wax crude oil reserves in the Uinta Basin.
The tribe said it signed an agreement with Indiana-based Calumet Specialty Products Partners that eventually could lead to the construction of a $300 million crude-oil refinery on its reservation in northeastern Utah.
"We have these large reserves of [black-wax] crude oil that we haven't been able to take advantage of fully," said Cameron Cuch, of the tribe's Ute Energy company. "We need to take that next step."
Black-wax crude comes out of the ground at a consistency similar to petroleum jelly. It is thick and viscous, and unlike the "light, sweet crudes" that are popular feedstocks for refineries, black-wax crude usually isn't transported by pipeline. It typically needs to be trucked in insulated tankers and must arrive at its destination within four to eight hours or it will solidify. If that happens, the tanker's cargo must be warmed up before it can be pumped out.
Utah's refineries primarily are set up to run lighter, sweet crudes.
Less than 12 percent of the 175,500 barrels of oil that those refineries process a day come from black-wax wells. And that has proved problematic for oil producers in the Uinta Basin such as the Ute Tribe, whose land holds a wealth of black-wax reserves.
Jennifer Straumins, a senior vice president at Calumet, said the company agreed to help the Utes with their problem and potentially could lend its financial support for the construction of a refinery if the project proves tenable.
Calumet operates three refineries in northwestern Louisiana and is familiar with black-wax crude, she said.
"We've taken some of their crude before," Straumins said. "Right now we're not taking any, but we are trying to work out the logistics for that to happen again."
Maxine Natchees, chair of the Ute Tribe, said building a new refinery is the goal. "Trucking [our crude] somewhere will be a short-term solution. We also want to find a solution for the long term."
One of the problems is that there has not been a new crude-oil refinery built in the United States for 30 years, so there are only estimates of how long such an endeavor could take. It could be up to a decade.
"We haven't ever been involved in building a new refinery, but we have been involved in several major refinery expansions," Straumins said. "And that should help."
Texan Devere Bigelow, who grew up in Green River, believes there may be another solution closer at hand.
Bigelow and a partner purchased a mothballed used-oil refinery in Green River two years ago and hope to return it to production. Only this time, they want their EcoDomaine refinery to process black-wax crude instead of used motor oil.
"There is a lot of black-wax crude getting produced in Utah that has nowhere to go," Bigelow said. "With the refineries in Salt Lake willing only to accept a limited quantity, we could be well-positioned to soak up a lot of the state's black-wax production."
EcoDomaine's refinery, however, still needs to get its permits in order to begin production.
"We've had discussions with them, but I think it could be a longer-term project as well," the Utes' Natchees said.
She suggested that if the Ute Tribe is successful in building its own refinery, it could be a boost not only for the Uinta Basin but the whole state. An additional refinery could help increase gasoline supplies, potentially lowering prices. It also would help increase state revenues if oil producers, many of whom pay royalties to the state, have another place to sell their products.