Hess 2005 Annual Report Download - page 10

8
REFINING
Solid operating performance and record refining
margins resulted in strong earnings for our refining
business. During the first quarter of 2005, we
successfully completed major turnarounds of the
FCC units at HOVENSA and Port Reading and are on
schedule to meet clean fuel requirements for ultra-low
sulfur gasoline and diesel fuel at both of our refineries.
The HOVENSA refinery in the United States Virgin
Islands is jointly owned by the Corporation and
Petroleos de Venezuela S.A. (PDVSA) and is one of the
largest refineries in the world. The facility is strategically
positioned and enjoys significant economies of scale.
The refinery has 500,000 barrels per day of crude distil-
lation capacity and a 150,000 barrel per day FCC, which
allow it to make a significant volume of high quality
gasoline and distillates. In addition, the refinery has a
58,000 barrel per day delayed coking unit, which
enables the refinery to process lower cost heavy crude
oils. Gross crude runs at the refinery averaged 461,000
barrels per day in 2005. Crude runs were below 2004
levels primarily as a result of the turnaround of the
refinery’s FCC. After the completion of the turnaround,
the refinery ran at higher rates, which allowed HOVENSA
to benefit from the strong refining margin environment.
The Corporation also operates an FCC unit located in
Port Reading, NJ, which produces clean-burning gasoline
and heating oil for markets in the northeast. The facility
averaged feedstock runs of about 55,000 barrels per day
and benefited from favorable product margins in 2005.
SUPPLY & TERMINALS
The Corporation operates twenty-two East Coast
terminals that provide a competitive advantage in
supplying our Retail and Energy Marketing networks.
In 2005, the oil industry experienced major supply
disruptions as a result of Hurricanes Katrina and Rita.
During this challenging period, our Supply and Terminal
operations managed to keep our HESS Retail and Energy
Marketing customers supplied with refined products.
ENERGY MARKETING
Our Energy Marketing business is an important supplier
of natural gas, fuel oil and electricity to commercial and
industrial customers located on the East Coast, as well
as a supplier of natural gas to several large utilities
in this region. Our acquisitions of the natural gas
marketing businesses of First Energy Solutions and
EnLine Solutions in 2005 contributed to increasing
commercial and industrial natural gas sales volumes.
During the year, we maintained our market-leading
position in fuel oil sales to commercial and industrial
accounts in the northeast.
RETAIL MARKETING
The HESS retail network continued to expand in
2005, further solidifying our position as the leading
independent gasoline convenience store marketer
on the East Coast. In June of 2005, our WilcoHess joint
venture acquired 101 retail sites in North Carolina
through the acquisition of Trade Oil Company. During
2005, the Corporation built eight new retail sites
and acquired an additional five locations. We also
constructed 17 new convenience stores at existing
HESS retail sites. The Corporation plans to continue
this opportunistic growth through selective acquisitions
and new site development in key East Coast markets.
Marketing
&Refining
HESS EXPRESS RETAIL FACILITY IN MASSACHUSETTS