Share

Sign up for the Faster Lane
email newsletter
July 10, 2012
Print Friendly

New York Entrepreneur Reopening Somerset Petroleum Refinery

Invested $1,175,500 in refinery that has an estimated replacement cost of $60 million

By Gary Wollenhaupt

Demetrios Haseotes, CEO of Menands, N.Y.-based Hemisphere Management Corp., bought a boutique refinery in Somerset last year for $1.17 million and is spending another $10 million to put it back in operation later this summer. Hemisphere Management sells fuel at travel centers, truck stops, convenience stores and gasoline stations it owns from New England to Florida. Photo by Ken Shmidheiser

Back in 2008, entrepreneur Demetrios Haseotes walked away from a chance to buy a boutique oil refinery in Somerset. However, opportunity knocked a second time when the property came up for sale again in 2011, and this time the convenience store group owner took the plunge.

He’s investing millions to reopen the petroleum refinery and serve the local oil production market in Southeast Kentucky under the banner of Continental Refining Inc.

Haseotes invested $1,175,500 in a refinery that has an estimated replacement cost of $60 million, according to published reports. This time the price was right, both for the refinery and in the petroleum market.

“Somerset is in a good niche location, and it has a lot to do with the fact that there’s crude oil produced in Kentucky. That is the primary reason why I focused on Somerset and not other facilities,” Haseotes said during a spring visit to Kentucky from his upstate New York home. “At $100 per barrel for crude oil, everyone will drill for it, so we will have plenty of supply.”

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 a day at full operation. It has a storage capacity of 107,000 barrels of crude and refined oil products to serve the local bulk-fuel market.

The reopening is good news for local oil producers.

“It’s encouraging that Continental is getting the refinery up and running again,” said Kim Collings, director of the Division of Oil and Gas Conservation of the Kentucky Department of Natural Resources.

The refinery produces regular gasoline, heating oil, diesel and residual products. One product for international markets is bunker diesel fuel for ships, and Haseotes said the Somerset refinery would be one of the few that can produce that fuel while meeting environmental standards without additional blending or processing. About two-thirds of the overall production will be sold to local bulk fuel marketers.

Oil in his veins

A native of Rhode Island, Haseotes has been involved in various aspects of the petroleum business since 1980, including being an owner and past director of the Cumberland Group of Companies, which include Cumberland Farms Inc. and Gulf Oil LP. He was involved in convenience store operations as well as gasoline facility construction and store site selection and planning.

He earned a bachelor of science in management from Bryant University in 1990. Since 1993, he has been president/CEO of Hemisphere Management Corp. based in Menands, N.Y., a city that adjoins the state capital of Albany. Starting with a single gasoline location in Marshfield, Mass., he has grown Hemisphere into more than 33 gasoline, convenience and truck stop locations between New England and Florida.

In 2002, Haseotes launched Midland Farms Inc. By 2005, sales of the company’s private-label juice and dairy brands reached $25 million.

Investing in the future

After purchasing the Somerset refinery, Haseotes is pouring in an additional $10 million for a significant maintenance turnaround. Continental will return to operations this summer and plans to achieve full capacity within two years. The refinery was shuttered for two years, so the new owner wants to make sure it’s ready to fully function again.

“You just don’t shut it down once you start, and we’ll run for about 18 months straight after we restart,” Haseotes said.

The Somerset Oil brand gas stations associated with the refinery in the past were not part of the deal, but Haseotes said he plans to use his experience to develop retail locations for the refinery’s products.

The location of the refinery will save area oil producers money because they won’t have to transport their crude as far as to reach other refineries. And Haseotes is looking forward to working with local producers and becoming a part of the business community.

“To not be from Kentucky and get such a positive reception is, frankly, a refreshing surprise,” he said.

Kentucky’s other refinery

Meanwhile, the Marathon Petroleum Co. refinery in Catlettsburg is the 31st largest in the country, producing about 2 percent of the gasoline made in the United States.

It became part of Marathon in 1998, when the Findlay, Ohio-based oil company took over the former Ashland Inc. refinery situated on 650 acres near the confluence of the Big Sandy and Ohio rivers.

The refinery was built in 1922 and acquired by the Ashland Refining Co. – later Ashland Inc. – in 1924. It underwent a major expansion in World War II to support the war effort. It uses both sweet and sour crude oils to produce 233,000 barrels per day of gasoline, diesel, jet fuel, asphalt, propane, heavy fuel oil, propylene, cumene, tolune, butane and sulfur.

The operation employs about 800 direct employees and approximately 700 contract workers. Oil arrives by pipeline and barge, and finished products depart via truck, rail, pipeline and barges.

The refinery is one of six in the Marathon system, which overall produces 1.19 million barrels of product a day.

 

Print Friendly
Join The Discussion
Lane Report Cover July 2012 In This Issue
Cutting Edge of Legal Innovation
Bar association honors new Kentucky firm’s online intake tool as nation’s leading advance in eLaw
Features

Dimmer Outlook For Energy Sector
Environmental regulations and new energy sources add up to higher costs and prices for Kentucky’s producers and consumers

New York Entrepreneur Reopening Somerset Petroleum Refinery
Invested $1,175,500 in refinery that has an estimated replacement cost of $60 million

Healthier Financial Incentives
Humana and Norton Healthcare pilot program is leading national effort to craft accountable care organization

Manufacturers Must Go Green
Kentucky industries share best energy conservation practices in advance of increasing costs

The Town-Gown Dilemma
Higher education not meeting job market demand for STEM skills

Kentucky’s Fab Five
Kentucky cultural districts showcase how the arts impact a community

One-On-One: Michael Johnathan
Folksinger and performing arts entrepreneur Michael Johnathon discusses working in the rapidly changing music industry

Kentucky’s Public Riverports
Post-Panamax shipping into the Gulf presents opportunity, but infrastructure upgrades are needed

Departments

Business Briefs

Fast Lane

Features

Interstate Lane

One-On-One