Random Look At Refiners: HollyFrontier, COP, PSX

Motley Fool is reporting:

What may be considered a great stroke of luck could potentially be one of HollyFrontier's greatest competitive advantages going forward.

Unlike large competitors Phillips 66 and Valero, which have a majority of their refining capacity in the Gulf of Mexico or on the coasts, HollyFrontier's five refineries are all located in the mid-continent, Rockies, and southwest regions, which puts them all smack-dab in the middle of the Mississippian Lime, Niobrara, Permian, and Uinta formations.

The linked article has three nice graphics; when you get there, note that the bottom-most graphic is of HollyFrontier.  The article goes on:

Second, most of these unconventional plays lack sufficient capacity. So E&P companies that have leveraged their entire portfolios into a single play -- think SandRidge Energy and its 1.85 million acres in the Mississippian Lime -- will need to rely heavily on local refiners to buy product. A bottlenecked market could lead to discounted prices for local crudes. Bad for E&P, very good for HollyFrontier.

As of right now, several of the younger shale plays, like the Mississippian lime and the Niobrara, have yet to deliver crude to HollyFrontier refiners, because the company's refineries are currently designed to handle Western Canadian Select blend and Christina Lake crudes. This is probably due to change, though. 

CEO Michael Jennings recently stated in a conference call that he believes the company will start to see opportunity from these basins within a year. What also makes this path so attractive is that Gulf refiners such as Phillips 66 and Valero seem more keen on processing heavy oil from the Canadian oil sands rather than mid-continent crudes because of the oil sands' similarity to its current feedstocks.