Montana Refining
Downstream Sector
Montana has a long history in production and refining, dating back to the early 1900’s. In 1935, there were 20 refineries operating across the Treasure State. Today there are four, with a total refining capacity 10 times greater than that of the thirties.
Quick Facts:
Cumulative refining capacity of Montana: 205,000 bopd (barrels of oil per day)
Products produced: gasoline, ultra-low sulfur diesel fuels, aviation fuels, butane, propane, petroleum coke, and asphalt
Employment: 1,200 (full-time/contractors)
Refineries represent 60% of Montana’s manufacturing sector
Investment in upgrades over the last 10 years: Approx. $2 billion dollars
Causes/organizations supported by Montana refineries (partial list):
Great Falls Voyagers | Local schools | C.M. Russell Museum | Big Brothers & Big Sisters of Great Falls | Casa Can | Great Falls Children’s Museum | Lewis & Clark Interpretive Center | Shrine Circus | Easter Seals/Goodwill | Kiwanis Club | American Cancer Society | The Great Falls Symphony | Montana Council Boy Scouts of America | Association of Montana Troopers | Crimestoppers | Montana State Fair | Neighbor Works of Great Falls | Great Falls Area Chamber of Commerce | Cascade County | Deputy Sherriff’s Association | Special Olympics Montana | Life Way Pregnancy Services | Great Falls Community Ice Foundation | Great Falls Optimist Club | Billings Public Library Foundation | Wise Wonders Children’s Museum in Billings | Yellowstone Kelly Project | Firearms Training Facility for the Billings Police Department | Billings Firefighters | ZooMontana | Pheasants Forever | United Way | Montana Tech | MSU-Northern | Montana Firefighters Memorial | Alzheimer’s Association | Montana Rescue Mission | Project Lead The Way – Billings Schools STEM initiative | American Red Cross of Montana
Top Taxpayers in Yellowstone County:
#1 – CHS Inc., Laurel
#3 – Phillips 66, Billings
#4 – ExxonMobil Corp., Lockwood
Collectively, the three refineries pay 25% of the county’s total property taxes.
CHS Refinery – Laurel, MT
Built in 1943: Yellowstone County’s oldest refinery
Employees: 300 employees at the refinery
Capacity: 60,000 bopd – 700 million gallons of fuel produced annually
The CHS refinery is working on a $406 million project designed to boost its diesel capacity by 2019. It’s the second major project in less than a decade, following the $400 million coker unit construction completed in 2007, when CHS added 35 full-time jobs and a $3.5 million payroll. (Billings Gazette, October 2015)
Phillips 66 Refinery – Billings, MT
Built in 1949
Employees: 430 (including contractors)
Capacity: 60,000 bopd
Products: Transportation fuels (gasoline, diesel & aviation fuel), Aviation fuels, Fuel-grade petroleum coke
Upgrades: Between 2015 – 2017, Phillips 66 spent $289.8 million to improve crude oil processing efficiency and sulfur recovery. The project also improved overall refinery safety and reliability.
Steve Arveschoug, executive director of Big Sky Economic Development, welcomed the investment in refinery improvements for a significant boost to the Billings economy. “It keeps the folks in the trades employed, and it means business opportunities for suppliers.” (Billings Gazette, December 2015)
ExxonMobil – Lockwood, MT
Built in 1949
Employees: 400 (including contractors)
Capacity: 60,000 bopd – 600 million gallons of gasoline & diesel fuel annually
Products: all grades of gasoline, conventional gasoline blendstocks for blending with ethanol, ultra low sulfur diesel fuels, asphalt, butane and propane
Uprades: The refinery has completed several large-scale, multimillion-dollar environmental projects that have significantly reduced emissions. In 2002, ExxonMobil received certification on 110 acres of undeveloped wildlife area, and was recertified by the international Wildlife Habitat Council in 2005, 2008, 2011 and 2014 for outstanding habitat management and environmental education..
Since 2002, SO2 emissions at the have decreased by 90 percent.
Calumet Montana Refining – Great Falls, MT
Built in 1922
Employees: 170
Capacity: 25,000 bopd (two-fold increase from pre-2016 expansion)
Products: Gasoline, diesel, jet fuel, asphalt
2016 Expansion: Involved 1.8 million man hours, with up to 594 contractors on-site, and included construction of four new processing units; a mild hydrocracker unit to convert gas-oil to higher value distillates; a new hydrogen plant to support the mild hydrocracker unit; and a fuel gas treatment unit.
Calumet Specialty Products’ recent $450 million investment in the oil refinery in Great Falls increased production and employment — and it was also the “largest historical investment by a company dollarwise ever in Cascade County.” Great Falls Development Authority President Brett Doney
(Great Falls Tribune, April 2016)
History
Roaring Twenties: Montana boomed with oil exploration and production, leading to the construction of the state’s first refineries.
The first refinery is rumored to have been built near Winnett, Montana by a rancher with parts salvaged from a steam-powered tractor.
Several refineries were erected in the Cat Creek field, discovered by Franz Oil Corporation. Small pop-ups near oil strikes, known as “tea kettle” refineries, were among the most rudimentary of early gasoline-producing refineries. Cat Creek crude oil was known for its high gravity, yielding nearly 50% gasoline.
Between 1921 and 1922, two refineries were built in Lewistown, one owned by Arro, and other by Lewistown Oil and Refining Company – later purchased by Continental Oil (Conoco). Both operated for twenty years before closure. During this time, Lewistown became known as became known as “the gate city to the 1,000 barrel oil fields of Fergus county.” (Great Falls Daily Leader. Oil Edition, Feb. 24, 1921)
Further East, the Miles City Oil Refining Company built a two thousand barrel crude oil refinery that was operating by 1921.
In North Central Montana, the Kevin-Sunburst field, home to the famous Fulton-Rice pool, ranked first in Montana crude oil production for several years, until it was surpassed by production of the Cut Bank field in the early 1930’s. Refineries were constructed, including the Kevtana refinery (which later became Big West). It operated for nearly 50 years, a decade less than International Refining (eventually Texaco) in the same area.
In 1923, the Sunburst refinery was built in Great Falls. Within three years, it had a total daily refining capacity of 3,000/bbl, and sat on a lot 22-acres large – making it Montana’s largest refinery.
There were two refineries in Butte, and another (Hart Refinery) in Missoula. In the Flathead, Unity Refinery operated in Kalispell intermittedly from the early 20’s until 1960.
By 1929, there were 13 operational refineries in the state, largely serving local and regional markets.
1930’s: Montana’s downstream sector took off in the thirties. With the loss of crude oil sales to the Canadian market, increased refining capacity in Montana became essential.
Between 1931-1932, a 1,200/bopd refinery was built in Great Falls – the Home Oil and Refining Company, organized by W.M. Fulton and W. E. Rice (both recognized as part of the “fathers of the crude oil industry in Montana”).
By January 1, 1935, there were 20 operating refineries in the state of Montana – in Lewistown, Roundup, Bears Den, Billings, Kevin, Conrad, Collins, Cat Creek, Hedgesville, Missoula, Great Falls, Winnett, Laurel, Sunburst, Red Lodge, Kalispell, and Butte.
The total daily capacity of all refineries was just more than 20,000 bbl (less than the capacity of Montana’s smallest refinery today).
In 1937, a 1,500/bopd refinery was built in Kalispell by Yale Oil and Refining Company of Billings.
In 1939, Glacier Production Company, Producers Refining Company, and Socony Vacuum Company agreed to construct a 3,500/bopd refinery in Cut Bank, Montana.
Increased rail and refining capacity helped Montana alleviate the impact of losing its Canadian market.
World War II & “The March of the Majors”: In the 1940’s, the Canadian market reopened to Montana refined products, due to increased demand driven by the Canadian Armed Forces.
A new 2,500/bopd refinery was constructed in Shelby, Montana in 1940 by the Production Refining Corporation of Shelby.
Once the U.S. entered WWII, the oil industry was transformed into a necessary defense industry, driving demand for crude oil and refined products. Increased demand fueled wildcat drilling across the state, leading to the revival of the Elk Basin field in Southeast Montana.
Drilling operations in the Elk Basin first began in Wyoming in 1915, with results that spurred exploration on the Montana side of the border. When the Ohio Oil Company struck oil, the Elk Basin was opened up as the first permanent oil field in this state. Production peaked in 1917 at just under 100,000 bbl, before gradually declining. Years later, a revival in drilling increased production to 940,215 bbl from Elk Basin in 1945.
Increased production in the Elk Basin field grew demand for refining capacity in nearby Billings. In the late 1940’s, two modern refineries were constructed.
While the forties were marked by increased drilling for the war effort, the downstream sector also underwent many changes in ownership of Montana refineries.
In 1941, the Home Oil and Refining Company plant and the Conrad refinery were purchased by by A.B. Cobb of Cut Bank, and Standard Oil Company of New Jersey bought the controlling stock in the Santa Rita Oil and Gas
Company in November, 1942. The Independent Refining Company at Laurel was purchased by Farmers Union Central Exchange, Incorporated, and Union Oil Company of California bought the Cut Bank Refinery. In 1944, Carter Oil Company bought the Billings refinery from Yale Oil Company. Phillips Petroleum purchased the Home Oil Refinery in Great Falls from A.B. Cook in 1947.
By 1948, the number of operating refineries shrunk to 14 (down from 20 in 1935). Total capacity, however, was more than double what is was ten years earlier.
These transactions, putting major oil companies in charge of many productive properties and operations, were thought of favorably, and contributed to greater optimism about the future of Montana’s oil industry.
1950’s-60’s: Across the country, small refineries began to shutter. This trend was reflected in Montana. As production dwindled in oil fields near Lewistown, the refinery there closed.
In 1953, the company Jet Fuel built a small refinery in Mosby to service the Glasgow and Great Falls bases. A small plant was also built in Wolf Point in 1961 with hopes of serving the Glasgow air base.
Once production began in the Williston Basin, crude was shipped out-of-state for refining. The export era had begun for Montana refined fuels.
In 1961, nine refineries were operating at least seasonally in the state. Two years later, the North Star Refinery near Shelby went into operation. In 1965, Humble Oil dedicated modern upgrades, including a hydrocracker, at its refinery in Billings.
Billings became the refining epicenter of Montana, thanks to large investments in upgrades and new export pipelines.
1970’s-80’s: Consolidation and closures continued through the 1980’s.
Today, four refineries remain, three of which are in the Billings area of Yellowstone County.
Consulted Works
A History of Petroleum County, 1989.
Douma, Douwe, “Development of the crude oil industry in Montana” (1952). Graduate Student Theses, Dissertations, & Professional Papers. 8659.
Hennip, R.D., History of the Crude Oil Industry in Montana, 1973.