The principal officer of Continental Refining Company, purchaser of former Somerset Refinery, said Friday he is “very optimistic, even more than when he purchased the facility” about creating a good relationship with area oil producers.

“Continental Refining Company is working diligently through a series of meetings to build relationships with local and regional crude oil producers,” said Demetrios Haseotes, president, chief executive officer and chief operating officer of Continental Refining. “We are grateful for the positive interest and professional courtesy we have received from area producers.” 

A former owner allegedly failed to pay area producers and many of them refused to sell their oil to Somerset Energy Refining, name of Somerset Refinery prior to its sale to Continental Refining. Haseotes said earlier he sympathized with the producers’ position and does not blame them for their actions.

Haseotes also said he is “pleasantly surprised” to find the city of Somerset so deeply involved in the natural gas industry “ ... and we want to be involved in oil and natural gas. We have been in discussions with (Mayor Eddie Girdler) and city officials about their natural gas plant,” said Haseotes.

Somerset has a natural gas pipeline to Eastern Kentucky and has access to an abundance of natural gas. Girdler recently told the Somerset-Pulaski County Chamber of Commerce “ ... our pipeline has capability of joining three interstate pipeline systems that flow from the Gulf to Canada. We had sessions with one of the largest natural gas transmission companies in Houston (and we) are planning to install high tech and computer-based natural gas operations at our proposed energy center. Somerset can become one of the regional leaders in the United States, and that is our goal,” the mayor remarked.

“We are on the same page,” said Haseotes of his discussions with the city. He expressed a desire that Continental Refining and Somerset can work together in the natural gas industry.

Haseotes said Continental Refining plans to utilize Somerset Rail Park to move bulk oil from distance sources. He said many of the estimated 200 indirect jobs created by the refinery will be at the rail park location.

Company officials said the refinery will begin operation in early summer. It will increase productivity from the current “warm idle” status to 61 percent capacity by the end of this year and be operating at full capacity by mid 2013.

In addition to the 7,200 barrels per day of crude oil produced within a 100-mile radius of Continental Refining, the company will have access to 45,000 barrels per day in neighboring oil-producing states, according to U.S. Energy Information data. The refinery can refine 5,500 barrels of crude oil a day at full operation. It has a storage capacity of 107,000 barrels of crude and refined oil products.  

Continental is planning to install by 2014 a hydrotreater to reduce sulphur content of its diesel products. The refinery produces regular gasoline, heating oil, diesel and residual products.

Ten employees who have been retained at the refinery will remain. The employment trend will range upward to between 40 and 50 people by early this summer with a jump of about 10 more when the refinery is in full operation. The company has said it will hire former employees of the refinery who left in good standing.

As part of the modernization process, Haseotes said his firm is remodeling an existing building into a new main office within the gate at 300 Monticello Street. Construction began in January and completion is scheduled for June to coincide with beginning of refining operations. He said the office space is about 30 percent complete.

During the first month after the purchase, environmental enhancements at a cost of $40,000 have taken place, including maintenance on the wastewater treatment plant. Haseotes said equipment at the refinery is in remarkably good shape because former owners spent a considerable amount to upgrade the facility. The only thing is deterioration from being shut down for about two years, he noted.

“Continental Refining Company is in talks to assemble contractors and is bidding out jobs for plant enhancements and operations,” Haseotes said.      

“Consistent with our production schedule for June 2012, we are seeking contractors for plant modernization, environmental compliance and facility improvements. In the near term we expect to generate $1.5 million in vendor contracts and payroll,” he added.

The former Somerset Refinery owned several Somerset Oil Service stations that retailed products produced at the refinery. The stations were sold earlier and were not a part of the purchase by Continental. Haseotes said the current focus is on the refinery but that his company is familiar with the retail business and will look at this opportunity in the future.

Continental Refining Company purchased Somerset Energy Refining in December. The purchase includes acquisition of the refinery on 93 acres, located off Monticello Street. The purchase included 15 modern tanker trailers for regional transportation.