xx UPDATE 1-BP's Indiana refinery ramp up timetable slips into 2014

Reuters

LONDON, Oct 29 (Reuters) - BP Plc's upgraded 405,000barrel per day (bpd) Whiting refinery in Indiana will not reachfull production until the first quarter of 2014, its quarterlyresults showed on Tuesday, an apparent slippage in the ramp-uptimetable.

Problems with construction of a coking unit as part of the$4-billion revamp of the refinery were reported by Reuters inSeptember.

The company said the project "remains on track to commissionthe remaining new units associated with the investment by theend of the fourth quarter," but added: "We will progressivelyintroduce heavy feedstock once the coker is operational duringthe fourth quarter, and expect to achieve full run-rate capacityduring the first quarter of 2014."

BP said the 100,000 bpd coker unit, crucial for a refinerywanting to process cheaper and heavier Canadian crude, will comeon stream in November.

"This statement is consistent with what we have always saidabout the project. Completion before year-end," a U.S.-basedspokesman for BP said in an email.

But analysts said that in previous briefings, BP has saidWhiting would deliver a full year of profits in 2014.

"Whiting looks to have slipped slightly, with BP now talkingabout full capacity to be reached in Q1 2014. Prior guidance hadbeen for 2014 as a 'full-year' of profitability for theproject," Tudor Pickering Holt & Co said in a note.

Once the upgrade is complete, heavy sour Canadian crude oilwill constitute 80 percent of Whiting's crude slate, BP said.

The Canadian grade now trades at a heavy discount of about$30 to the U.S. benchmark futures contract, but BP said thatdifference is likely to narrow as Whiting ramps up itsconsumption of oil sands crude.

"I think as the Whiting units start to ramp up, that 100,000(bpd coker) comes on stream, you will see those spreads comedown," Chief Financial Officer Brian Gilvary said during aconference call.

"One of the reasons why you see these big WTI-heavy spreadsright now is because, actually, that oil isn't being soaked upyet by Whiting. As Whiting comes on stream we would expect thatdifferential to come down quite significantly," he said.

Gilvary added that while the company will not reveal at whatWTI-Canadian spreads the Whiting modernisation project was basedon, the assumption was "certainly, a number well below the30-odd dollars a barrel."

The upgraded refinery is one of the company's key profitdrivers for the future, and its output is closely watched bytraders for its potential impact on the price of crude oil inNorth America.

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