An Overview of Montana Refinery, our downstream asset:
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Connacher owns and operates a complex 9,500 bbl/d heavy oil refinery in Great Falls, Montana, located near the U.S.-Canadian border. The company purchased these refining assets in 2006 and has upgraded them to meet current environmental standards. The refinery makes a full range of fuel products, including various grades of gasoline, diesel, jet fuel and distillates. Heavy crude oil processed at the refinery is also well-suited to the production of high grade asphalt products. Not surprisingly, Connacher’s refining subsidiary, Montana Refining Company, Inc. (MRC), is a major supplier of paving grade asphalt, modified polymer grades and asphalt emulsions for road construction. Products are marketed to retailers located in Montana and in neighboring states and in Southern Alberta. The refinery is well-serviced by truck and rail transport.
In addition to its importance as a profitable business, the refinery has been an excellent strategic fit with Connacher’s oil sands business. The refinery processes predominantly Canadian heavy crude oil, which is purchased at a discount to the price for light sweet crude oil. This discount is very similar to the discount applied to Connacher’s diluted bitumen (dilbit) sales from Great Divide. Accordingly, our refining activity serves as a physical hedge against volatility in the price differential for heavy crude oil. The refinery provides additional value in the premium or "crack spread" it receives for its products over and above the price of crude oil. There is also synergy arising from the refinery’s capability of producing diluent for use in blending with Connacher’s bitumen production at Great Divide.
