Refining & Marketing consists of Ergon’s refinery operations and the marketing of various refined products, including naphthenic and paraffinic base and process oils, gasoline, distillates, and other products manufactured in the crude oil refining process.

Refining & Marketing

Ergon’s Refining & Marketing operations make up the largest business segment, encompassing the purchasing and conversion of global crude oil from a variety of sources into diverse petroleum products including gasoline, diesel fuel, kerosene, both naphthenic and paraffinic specialty process oils, waxes, asphalt, and other related oils from the refining process; and the global marketing of those products.

Ergon Refining, Inc.
Ergon formed Ergon Refining, Inc. (“ERI”), and built its first refinery at Vicksburg, Mississippi, in 1978 as a fuels refinery and added a vacuum distillation tower in 1981 to produce high-quality asphalt. In 1988, the facility began manufacturing high quality specialty naphthenic process oils with the use of its first hydroprocessing unit. Today, with the addition of a second hydrotreater and ROSE propane de-asphalting unit, the Vicksburg refinery has grown to become one of the largest manufacturers of naphthenic process oil in the world, producing naphthenic process and base oils, brightstock, electrical insulating oils, ultra-low sulfur diesel fuel, naphtha and asphalt. The Vicksburg refinery currently has a processing capacity of up to 25,000 barrels of crude oil per day, although specific crude types and optimization of downstream units impact the amount of barrels actually processed.

Strategically located 340 river miles north of New Orleans in the Vicksburg Industrial Park just off the Mississippi River, ERI benefits from low transportation costs via river, rail and highway. ERI also enjoys distinct competitive advantages in the process and base oil industry due to its ability to easily obtain and refine any type of naphthenic crude into high-quality finished oils for niche markets worldwide. With special processing technology developed exclusively by ERI, the Vicksburg hydroprocessing plant allows safe, efficient and clean processing of highly acidic, high-sulfur crude oils that many competitors cannot utilize without blending. ERI produces distinctive specialty petroleum products using a distributed digital control system which sets operating parameters and maintains critical process variables, while an ERI-developed statistical process control system aids operators in maintaining the highest standards of product consistency, repeatability, quality and stability.

ERI processes crude oils from various fields in the North Sea that are wax-free naphthenic heavy crude oils containing high quantities of naphthenic acids and sulfur. The crudes run by ERI are especially corrosive, and there are a limited number of refineries that can process such crude without dilution with more expensive, less acidic crude. ERI has made significant investments in equipment constructed of sophisticated corrosion-resistant metallurgy to be able to process this type of crude. ERI has previously utilized naphthenic crude from other sources, including crude from near Lake Maracaibo, Venezuela, and continues to evaluate other naphthenic crudes available from other sources around the globe. ERI’s sister company, Ergon Oil Purchasing, handles the initial crude purchases for cost and efficiency purposes.

Crude oil is loaded in 80,000 ton tankers in the North Sea and shipped to the Ergon-St. James, Inc., terminal located near St. James, Louisiana (“Ergon-St. James”), 162 miles upstream of the mouth of the Mississippi River. The crude is held in storage tanks before being transported by barge up the river to Vicksburg. Two four-barge tows owned and operated by Magnolia Marine Transport Company are chartered by ERI to make the round-trip from St. James to Vicksburg.

Once production is completed, process oils are stored near the refinery and then sent by barge, truck, and rail either directly to customers or to bulk storage tanks in terminals around the world for final distribution. Due to heating requirements, asphalt and related products are typically stored in insulated and heated tanks at the refinery and then shipped via insulated trailers to the customer or in heated barges directly to a terminal near the final market.

Naphthenic base and process oils produced at Vicksburg are used by Ergon’s global customers in electrical transformer oils, compound blending operations, rubber products, chemical processing, printing inks, metal working fluids, refrigeration oils, paints and greases.   

ERI subsidiary Ergon Europe MEA, Inc., was formed to distribute process oils to customers in Europe and the Mediterranean Sea area directly through nearby terminals initially in Belgium and the United Kingdom. ERI is also expanding its global distribution network in South America, Asia and Australia.

ERI also produces multiple grades of liquid asphalts at Vicksburg; including industrial asphalt flux and SUPERPAVE® asphalt paving products.

Also at the Vicksburg facilities, Ergon Asphalt & Emulsions, Inc., produces polymer-modified asphalts and asphalt emulsions. Polymer-modified asphalt is a high-end, more expensive asphalt product that increases the longevity of the paving where it is applied. This type of asphalt is used on expressways, urban roads, intersections, airport tarmacs, and other high-traffic areas. Ergon markets its paving asphalt products through Ergon Asphalt & Emulsions, Inc., and Crafco Inc.

Ergon - West Virginia, Inc.
Recognizing an opportunity to expand its niche markets with high-value, paraffinic products, Ergon’s subsidiary, Ergon - West Virginia, Inc. (“EWV”), acquired the refinery at Newell, West Virginia, from Quaker State in July 1997. Originally built in 1972, the Newell refinery utilizes high pressure hydrotreating technology to produce highly-refined paraffinic process and base oils, waxes, ultra-low sulfur gasoline and diesel fuels, kerosene solvents and petroleum resins from local Appalachian grade crude.

EWV currently has capacity to process approximately 20,000 barrels per day of crude oil. EWV processes 100% Appalachian grade paraffinic crude oils, particularly Pennsylvania grade gathered from approximately 40,000 facilities throughout Ohio, Pennsylvania, West Virginia, Kentucky and New York.

The crude refined at EWV provides a very high yield of paraffinic lubes when compared with other types of crude oil processed by paraffinic competitors. The crude is transferred by truck or pipeline to gathering centers in Magnolia, Ohio; Marietta, Ohio; and Mercer, Pennsylvania before moving on to the refinery via truck, barge, and pipeline. EWV maintains the flexibility to purchase additional crude from other sources and ship it to the refinery via barge or pipeline.

After the refining process, the ultra-low sulfur fuel products are sold at the refinery rack or transported by truck and rail to its customers within EWV’s regional market. The process and base oils refined by EWV are used in a wide variety of applications, including compounding motor oils, gear oils, greases, pharmaceutical and agricultural spray oils, food grade applications, and in high-temperature rubber applications.

Since EWV is the only refinery in the Northeastern U.S. with significant Group II base oil production, it enjoys a substantial transportation and terminaling advantage over competitors that must barge products from the Gulf Coast up the Mississippi River and Ohio River or deliver via long-range rail. Set by the automotive industry to provide better fuel efficiency and reduced emissions, Group II standards require low volatility base oils with a high viscosity index and a narrow boiling point.

Paraffinic-based process oils find many uses paralleling Ergon’s naphthenic process oils produced at the Vicksburg refinery. The addition of these products has enabled Ergon’s Petroleum Specialties Marketing Division to offer a wide range of specialty products to customers.

Lion Oil Company
Since 1922, the Lion Oil refinery in El Dorado, Arkansas, has been a reliable supplier of petroleum products. The El Dorado refinery, with a throughput capacity of approximately 75,000 barrels of crude oil and feedstocks per day, is the largest independent refiner of high-sulfur crude oil in its primary market areas of Arkansas, Tennessee, Missouri, Mississippi and northern Louisiana.

In 1985, Ergon led a group of investors in forming Lion Oil Company (“Lion Oil”) to purchase the El Dorado refinery and has actively managed the operations. Since acquisition, hundreds of millions of dollars in capital expenditures have boosted production, enhanced performance, and enabled adherence to new environmental standards. Lion continues to improve production capabilities with equipment and plans to expand capacity to 100,000 barrels per day.

Today, Lion Oil processes sour crude from a number of sources into products such as ultra-low sulfur gasoline and diesel fuels, propanes, solvents and asphalt products.

Lion Oil maintains its own proprietary marketing network, supplemented with a diverse exchange partner program throughout the mid-continent. As the Northernmost refinery on the Texas Eastern Products Pipeline (TEPPCO), Lion Oil benefits from a response time and transportation cost advantage over Gulf Coast refineries when supplying fuels to its primary market area of the central Midwest and Mississippi River corridor.

Lion Oil’s process units contain special metallurgy that allows less expensive, higher sulfur crude oils to be utilized. Under Ergon’s management, Lion Oil has processed a combination of crude oils, including foreign high-sulfur crude from the Saudi Arabian Oil Company (“Saudi Aramco”), domestic offshore crudes from the Gulf of Mexico, and local onshore domestic crudes.

Lion Oil utilizes diversity in crude oils available through the Louisiana Offshore Oil Port (“LOOP”) and related salt dome storage. To support expansion of the refinery’s crude capacity and to offset declines in production from local Arkansas producers, Saudi crude and the expanded slate of other foreign and off-shore domestic crudes have been utilized. Due to the designed flexibility of the  refinery, additional crude sources could be accessed from numerous sources, including Poseidon, Mesa, Mars, Southern Green Canyon, Eugene Island and the new Thunderhorse field, as well as from Iraq, Mexico, Kuwait, and others. Lion Oil’s subsidiary, Lion Oil Trading and Transportation, Inc., (“LOTT”), handles crude oil purchases.

Lion Oil’s crude supplies are available to be shipped to the refinery through several pipeline systems, including ExxonMobil’s pipeline connected to LOOP, Lion Oil’s subsidiary, Paline Pipeline Company (“Paline”), and Lion Oil’s domestic gathering system. The LOOP connection improves Lion Oil crude supply logistics and increases its access to additional crude supply, providing greater flexibility and reliability. Lion Oil subsidiary Magnolia Pipeline Company (“Magnolia Pipeline”) operates a pipeline to link to ExxonMobil’s pipeline near Finney, Louisiana. The Magnolia Pipeline has been upgraded and designed to supply up to 100% of the refinery’s crude supply.

LOTT’s extensive local gathering system in Arkansas and Louisiana saves in transportation compared to truck options. With nearly 1,000 miles of local gathering pipeline system, LOTT delivers domestic crudes to the refinery from southern Arkansas and northern Louisiana, mostly from the prolific Smackover field near El Dorado, Arkansas.

Lion Oil subsidiary pipelines are operated by a computerized monitoring system. The control system is maintained at El Dorado and continuously displays the status of the pipeline. Unmanned pumping stations are supported by satellite uplinks and internet connections. The monitoring system features leak detection and total automatic shutdown systems in the event of damage.

Lion Oil markets a wide range of petroleum products, from multiple grades of ultra-low sulfur gasoline and diesel fuels to solvents, propanes and asphalt products. Lion Oil sells its finished products to wholesale jobbers, convenience store operators, fuel stop operators, cooperatives, commercial consumers, and government accounts.

Lion Oil sells its gasoline and distillate products from Lion-owned and operated terminals in El Dorado, Arkansas, and Memphis, Tennessee, through third-party exchanges, and on the spot market. Lion’s asphalt products are marketed over racks at the refinery and through offsite terminal locations within its market area.

Ergon Oil Purchasing, Inc.
Ergon Oil Purchasing, Inc. provides crude oil acquisition, logistics, and division order processing and payments for other Ergon subsidiaries as well as crude trading and sales activities with external customers.

Ergon Ethanol, Inc.
Ergon has evaluated alternative fuel development options for several years, including renewable energy sources such as ethanol. In 2006, Ergon Ethanol, Inc., joined forces with a major grain company forming Bunge-Ergon Vicksburg, LLC to construct and operate a 54 million gallon-per-year ethanol plant in Vicksburg, Mississippi. Completed in mid 2008 with river, rail and truck access, the plant is a consistent supplier of ethanol to the local fuels market as well as to customers pursuing supply along the Mississippi River.