Refining

1997–2002

A refinery vision takes shape

On 29 May 1997, InterOil entered a project agreement with the Papua New Guinea Government to build and operate a refinery. Phil, a petroleum engineer and founder of Petroleum Independent & Exploration (PIE), brought an operating background to the venture. InterOil’s filings credit PIE with leading the refinery’s development and the commercial work needed to establish its viability. ^[3]

The Napa Napa plan combined relocated processing equipment with new infrastructure. Early engineering addressed the site layout, process design, utilities and marine access. A contemporary engineering account records front-end design work in 1997 and the granting of a petroleum processing facility licence on February 15th 2000. These were the steps that turned a concept into a project that could be built. ^[4]

Early Equity required

Early equity was required to complete all the earth works and early Marine systems – prior to any debt could be raised.

Before construction

From Alaska to the Texas Gulf Coast

The crude-distillation unit originated at Chevron’s former Nikiski refinery in Alaska, which was disassembled in Alaska in 1996, later shipped to Texas for refurbishment. The project also incorporated a reformer and associated desulphurisation equipment from a former Chevron refinery in Oklahoma. Equipment was taken to the Texas Gulf Coast for inspection, refurbishment and modification before shipment to Papua New Guinea. Napa Napa was therefore a combination of reused process units, engineering adaptation and new construction—not simply an existing refinery restarted in another country. ^[4]

For Phil and the project team, the challenge extended beyond obtaining equipment. Refurbished units had to work together with a new tank farm, wharf, power and water systems. The engineering and construction program had to produce a complete operating facility on a site separated from its suppliers by an ocean. ^[5]

2001–2002

Financing the build and securing the market

By March 2002, InterOil reported an alliance with Shell, a crude-supply arrangement with BP Singapore, and progress on site preparation and the marine causeway. Phil presented refining, distribution and exploration as parts of one vertically integrated strategy. ^[2]

A US$85 million loan from the US Overseas Private Investment Corporation (OPIC) provided major construction financing, post the eqyuity required for the earth works & early marine works. The first US$31 million disbursement was received on 28 March 2002 and announced on 2 April. This distinction matters: the financing agreement preceded the arrival of funds available for the final refinery build. ^[6]

In April 2002, InterOil announced the award of the refinery construction contract to Clough Niugini. Clough’s own project history describes responsibility for engineering, procurement, construction and commissioning, including earthworks, process units, tankage – sub contracted to Chicago Bridge and Iron –“CB&I”, marine facilities and utilities. The contract brought those separate pieces into one construction program. ^{[7, 5]}

2002–2003

Port Arthur to Napa Napa

On 29 October 2002, the first major consignment—more than 1,000 metric tonnes of refinery equipment—departed Port Arthur, Texas, for the PNG construction site. InterOil announced the departure the next day. That release forecast arrival in December; it documented a shipment milestone rather than the completion of the whole refinery. ^[8]

At Napa Napa, the receiving site was becoming a purpose-built industrial complex. Clough’s scope included the storage tank farm – via CB&I, crude-distillation plant, hydrodesulphurisation and catalytic-reforming units, a loading and unloading jetty, steam and power generation, and supporting facilities. Construction involved much more than erecting the most visible towers: the systems around them would determine whether the refinery could receive crude, operate and dispatch finished fuel. ^[5]

2004–January 2005

First crude, first products, commercial operations

The first crude arrived in June 2004, followed by product sales in August. Testing at approximately 32,500 barrels per day began in November. InterOil declared practical completion in January 2005 and recorded 1 January as the start of commercial operations. ^{[9, 10]}

The refinery was designed around light, low-sulphur crude. Its principal domestic products included diesel, jet fuel and gasoline, while naphtha and low-sulphur waxy residue also formed part of its product slate. Some output supplied export markets or other industrial users. Turning crude into several products meant that commercial success depended on finding suitable outlets across the whole barrel. ^[11]

2005–2009

Making the plant work as an operating business

Start-up was followed by optimisation. In 2006, InterOil completed a refinery revamp and adjusted its crude selection to improve distillate yields and operating economics. The peak throughput was increased to approximately 42,500 bbls per day. The company’s annual report described the move from construction into a functioning integrated business. This was the less visible work after the first cargoes: improving how the plant ran, what it produced and how those products reached customers. ^[11]

The supporting infrastructure was substantial. By the 2009 reporting year, InterOil described two marine berths, a road-tanker loading gantry, approximately 750,000 barrels of crude storage and 1.1 million barrels of product storage. Desalination, power generation, laboratory services, wastewater treatment and emergency facilities supported operations. These details show why Napa Napa should be understood as a complete industrial site rather than just a distillation unit. ^[12]

2001–2004

Ensuring Mid-stream Product Distribution businesses

BP’s PNG business, acquired in 2004, and Shell’s network, added in 2001, linked refinery output to customers nationwide. The distribution chapter follows the terminals, shipping, aviation facilities and service stations. ^[13]

The BP & Shell retail and distribution locations in over 100 locations where re-branded to InterOil to show case loyalty to customers nationwide.

2010–2013

A mature part of Phil’s integrated business

As the upstream team appraised Elk–Antelope, refining & Midstream distribution remained an operating business alongside the exploration and proposed LNG developments. In its 2012 results, InterOil reported that the corporate, refining and downstream segments together earned US$61.2 million, offsetting expenditure and losses in its development segments. That is a combined segment figure, not refinery profit alone. ^[14]

For 2013, InterOil reported refinery throughput of 27,999 barrels per operating day, excluding shutdown days. Phil retired as CEO on 30 April and from the board on 14 November 2013, so the year’s results span his tenure and the leadership transition. ^{[15, 1, 16]}

30 June 2014

The refinery’s transfer to Puma Energy

On 30 June 2014, InterOil completed the sale of its refinery and distribution businesses to Puma Energy for US$525.6 million. The price covered both businesses. Staff were to transfer with the operations, and Puma could use the InterOil downstream brand for up to twelve months. The sale followed Phil’s departure. ^{[17, 18]}

2017

Where the refinery fits in the complete InterOil story

ExxonMobil completed its acquisition of InterOil on 22 February 2017. By then, Napa Napa and the fuel-distribution network had already passed to Puma. ExxonMobil’s acquisition therefore belongs to the later upstream chapter, while the refinery remains central to the account of what Phil and the founding team built. Read Exploration for the discovery and appraisal program that led to that final corporate transaction. ^{[19, 20]}