Frontier Oil lays off 12 more at Cheyenne refinery as benefit of heavy crude processing fades

Frontier Oil lays off 12 more at Cheyenne refinery

CHEYENNE, Wyo. — Frontier Oil Corp. laid off 12 salaried employees at its Cheyenne refinery Tuesday as it deals with weak demand for transportation fuels and higher costs for the heavy crude oil the refinery is designed to process, a company official said.

The layoffs, which were accompanied by the voluntary departure of two employees, marked the second set of staff reductions at Frontier’s Cheyenne facility in eight months. The Houston-based corporation laid off 14 salaried employees and 14 hourly workers last October. The refinery now employs 290 people.

“What we have is continued low demand for our transportation fuels, both gasoline and diesel, and that coupled with really a dramatic decline in what’s called the light-heavy differential has prompted this action,” said Gerald Faudel, Frontier’s vice president for government relations and environmental affairs.

The Cheyenne refinery was designed and modified to process heavy crude oils, Faudel said. The heavy crudes cost more to process but were cheaper than sweet light crudes. Now the price difference has largely balanced out, he said.

“We are restructuring both our operations and our work force to reflect those changes in the energy marketplace,” Faudel said. “We’ll be processing more light crudes, not running those heavy crude processing units continuously from now on as we have in the past and consequently resulting in the reduction in staff.”

Frontier is also moving some administrative duties previously handled in Cheyenne to its refinery in El Dorado, Kan.

The Cheyenne refinery has a production capacity of about 52,000 barrels per day but averages about 40,000 barrels per day, Faudel said. He said there’s no plans to curtail production.

The refinery’s products are sold mostly in eastern Colorado, including the Denver area, eastern Wyoming and western Nebraska.

Tuesday’s layoffs and the refinery’s transition to more light crudes is mostly unrelated to the company’s plans to reduce the refinery’s annual operating costs by $14 million — a plan that was announced with the layoffs last October. Faudel said the refinery is making progress toward that goal.

On the Net:

Frontier Oil Corp.: www.frontieroil.com