HollyFrontier 2014 Annual Report Download - page 33

Table of Content
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We are not engaged in petroleum exploration and production activities and do not produce any of the crude oil feedstocks used at
our refineries. We do not have a retail business and therefore are dependent upon others for outlets for our refined products. Certain
of our competitors, however, obtain a portion of their feedstocks from company-owned production and have retail outlets.
Competitors that have their own production or extensive retail outlets, with brand-name recognition, are at times able to offset
losses from refining operations with profits from producing or retailing operations, and may be better positioned to withstand
periods of depressed refining margins or feedstock shortages.
In recent years there have been several refining and marketing consolidations or acquisitions between entities competing in our
geographic market. These transactions could increase the future competitive pressures on us.
The markets in which we compete may be impacted by competitors' plans for expansion projects and refinery improvements that
could increase the production of refined products in our areas of operation and significantly affect our profitability.
Also, the potential operation of new or expanded refined product transportation pipelines, or the conversion of existing pipelines
into refined product transportation pipelines, could impact the supply of refined products to our existing markets and negatively
affect our profitability.
In addition, we compete with other industries that provide alternative means to satisfy the energy and fuel requirements of our
industrial, commercial and individual consumers. The more successful these alternatives become as a result of governmental
regulations, technological advances, consumer demand, improved pricing or otherwise, the greater the impact on pricing and
demand for our products and our profitability. There are presently significant governmental and consumer pressures to increase
the use of alternative fuels in the United States.
A disruption to or proration of the refined product distribution systems we utilize could negatively impact our profitability.
We utilize various common carrier or other third party pipeline systems to deliver our products to market. The key systems utilized
by the Cheyenne, El Dorado, Navajo, Woods Cross, and Tulsa Refineries are Rocky Mountain, NuStar Energy, SFPP and Plains,
Chevron, and Magellan, respectively. All five refineries also utilize systems owned by HEP. If these key pipelines or their associated
tanks and terminals become inoperative or decrease the capacity available to us, we may not be able to sell our product, or we
may be required to hold our product in inventory or supply products to our customers through an alternative pipeline or by rail or
additional tanker trucks from the refinery, all of which could increase our costs and result in a decline in profitability.
We may be subject to information technology system failures, network disruptions and breaches in data security.
Information technology system failures, network disruptions (whether intentional by a third party or due to natural disaster),
breaches of network or data security, or disruption or failure of the network system used to monitor and control pipeline operations
could disrupt our operations by impeding our processing of transactions, our ability to protect customer or company information
and our financial reporting. Our computer systems, including our back-up systems, could be damaged or interrupted by power
outages, computer and telecommunications failures, computer viruses, internal or external security breaches, events such as fires,
earthquakes, floods, tornadoes and hurricanes, and/or errors by our employees. There can be no assurance that a system failure or
data security breach will not have a material adverse effect on our financial condition and results of operations.