Exploration and Production Technologies

JAECO Oil Processing Program


This project was selected in response to solicitation DE-PS26-02NT15379-4, the Native American Initiative, seeking to stimulate economic development and increase oil and gas production on American Indian lands.

Project Goal
The project goal was to perform a feasibility study to evaluate the economic benefits of building a crude oil refinery at the southern end of the Jicarilla Apache Nation Reservation in Dulce, NM.

Jicarilla Apache Nation
Jicarilla Apache Energy Corporation (JAECO)
Dulce, NM

John D. Jones Engineering Inc.
Phoenix, AZ

Project Results
A feasibility study of constructing a simple refinery designed to process crudes from Jicarilla Apache Nation was undertaken with preliminary schematics and economics. The study showed that the refinery would be viable using available light, sweet crude. However, production of the crude source is declining. Since the crude source was key to the plant's viability, the tribe decided against refinery construction.

"Explore oil processing as a way to increase the value of oil from tribal lands.
"Determine the feasibility of a refinery to increase value and form a basis for other development of businesses.

Approximately 65 petroleum companies operate about 2,500 wells-which produce 6,000 barrels per day of 40° API gravity with very low sulfur and nitrogen-content crude oil-in the geographic area on the Jicarilla Apache Reservation of northern New Mexico. Because of limited oil production and transportation options, the tribe is dependent on regional refineries to process their crude oil. These refineries often set a low price for regionally produced crude oil because they have access to pipelines that can bring crude from outside the region. The Jicarilla Apache tribe is dependent on these refiners to supply their local fuel needs. The tribe frequently does not get the best value for the crude oil they sell, but they have to pay full market value for the refined products they purchase.

Project Summary
The Jicarilla Apache Nation collaborated with JAECO and John D. Jones Engineering to conduct a feasibility study to design an oil processing facility on the Jicarilla Apache Reservation in northern New Mexico. During the project, the participants:

  • Characterized local Jicarilla Apache Nation feedstocks for possible feed to a new specialty refinery.
  • Establishd the major equipment and layout of the refinery.
  • Determined the quantity and quality of products to be produced.
  • Completed the capital and operating cost data for the project.
  • Evaluated the feasibility of the project and quantified the value to the Jicarilla Apache Nation.
  • Created a CD-ROM detailing the evaluation methodology that may serve as a guideline for other tribes and potential small refiners.

Current Status (August 2005)
Based on the nature of the crude oils, it was determined that the process could utilize a nontraditional crude oil fractionation unit that would separate only process gas oil, naphtha, and kerosene fractions from all heavier fractions in the crude oil. The crude unit would be smaller and operate at a lower temperature than traditional crude units separating diesel and gas oil fractions. All heavier fractions would be processed together to remove sulfur and to convert waxy heavier oils to maximize gasoline and diesel production.

Analysis of the crudes produced on the reservation was conducted. The light, sweet crude slate allowed for a simple refinery configuration that matched crude oil specifications, estimates of future crude volumes produced from the reservation, and specifications for product slate, quality, and market potential for the products. A proposed refinery was sited within 30 miles of the majority of crude oil production. The proposed refinery location was located away from reservation population centers, so the potential for community development near the proposed refinery was analyzed.

Based on the process design, the principal products from 6,000 barrels per day of crude oil feed would be 3,600 barrels per day of gasoline, 470 barrels per day of jet fuel, and 1,900 barrels per day of diesel fuel. The value of these products was estimated at $87,500,000 for 2003. Based on the preliminary engineering of the process, it was determined a refinery would cost approximately $86,700,000 to construct and about $10,600,000 per year to operate. The project could have a return on investment of 20%. In a highly competitive crude oil market, the price of crude oil would rise relative to the value of the products, and the return would drop to 4%. Under these conditions, the tribe would still benefit, because it would realize higher revenues for the crude oil it produces.

The study gives a tribe or Native American corporation the knowledge necessary to evaluate processing options and to be a more savvy marketer of its crude oil.

The feasibility study project was completed in October 2004 and is available to the public on a CD-ROM by contacting the DOE project manager.

Project Start: September 30, 2002
Project End: October 29, 2004

Anticipated DOE Contribution: $343,000
Performer Contribution: $86,000 (20% of total)

Contact Information
NETL - Kathyleen Q. Stirling (kathy.stirling@netl.doe.gov or 918-699-2008)
Jicarilla Apache Nation - Jesse Evans (jevans232000@yahoo.com or 505-759-3224)

Seal of the Jicarilla Apache Nation.