Lion Oil: The Mouse that Roars

Lion Oil Company might not the biggest player in oil refining, but it’s unquestionably one of the best. Owned by Ergon, Inc. and other shareholders, this small refinery in El Dorado, Arkansas is one of the world’s most reliable suppliers of quality petroleum products.

Lion Oil produces 500 million gallons of gasoline, 375 million gallons of diesel fuel, and 150 million gallons of asphalt per year and posts more than $1 billion in annual sales. The refinery has a capacity of 70,000 barrels per day – large in comparison to Ergon’s specialty refineries, but smaller than average among other fuel refineries, most of which weigh in at around 110,000 barrels per day.

Collectively, Lion Oil Company, Ergon-West Virginia, Inc., in Newell, WV and Ergon Refining, Inc. in Vicksburg, Mississippi have a combined capacity of 112,400 barrels per day; compare that volume to industry giants like Exxon and British Petroleum, each of which boast a worldwide capacity of more than seven million barrels per day, and the size gap is even more striking.

Competing against bigger operations isn’t the only challenge Lion Oil faces. Rising costs and increasing regulations make for a tough business climate. Meeting new environmental regulations means huge investments in new equipment and technology; more and more of the profits from sales of gasoline must go to pay for this higher-priced equipment and technology.

For many refineries, the challenges have proven too great. In 1978, 344 refineries were operating in the United States. By 2004, that number had dropped to 149. Over the past 28 years, 195 refineries closed their doors and not a single new refinery has opened.

But at Lion Oil, it’s a different, brighter story. The company was founded in 1923. Since becoming affiliated with Ergon in 1985, Lion Oil has doubled its capacity. The company has invested hundreds of millions of dollars in new equipment, better processes, and environmental improvements. In an era that challenges refineries, Lion Oil is flourishing. Steve Cousins, Vice President of Refining, points to consistent reliability, a commitment to producing environmentally friendly or “green” products, and good corporate citizenship as the keys to Lion Oil’s success.

“We design reliability into our process,” Cousins says. “Our equipment is well built and well maintained, and we have very few unscheduled shutdowns. It’s like the difference between a well-built car and a not-so-well built car. Better design means less down time, more productivity, and more profit.”

Lion Oil’s claim of reliability is backed by industry benchmarking, which consistently places the company at the upper end of reliability rankings nationwide. And as Cousins point out, reliability isn’t limited to the equipment.

“Ultimately, reliability rests with our people, their training, and their work ethic,” Cousins says. “Like Ergon’s other companies, Lion Oil puts an emphasis on quality initial training and ongoing training for continual improvement.”

Another strength is Lion Oil’s product niche – the company has found a way to turn the proverbial sow’s ear into a silk purse. Lion Oil takes higher-than-average sulfur crudes – also known as sour crudes – and produces lower-than-average sulfur products. In layman’s terms, Lion Oil uses lower quality, less expensive crude oil to make cleaner, better products than those typically produced by the rest of the industry.

“Lion Oil is building on a long tradition of clean operation and producing green products,” Cousins says. “When it comes to environmental standards, the company has always been ahead of the curve.”

In 2004 and 2005, Lion Oil invested approximately $100 million in new processes to make ultra low sulfur gasoline – a standard that wasn’t required by the EPA until 2006. Even prior to the upgrade, Lion Oil was already producing gasoline with only one-third the sulfur content of the national average.

“Our vision for the long term is to hold fast to our proven business model and to continue to expand into new, clean fuel markets,” said Paul Fisher, Lion Oil’s Manager of Special Projects. “We’re proud that Lion Oil has stayed ahead of the curve when so many other refineries just couldn’t compete. We’re a small refinery, but we’ve not only survived where others haven’t, we’ve continued to be profitable.”

Lion Oil employs more than 500 people in South Arkansas. In a day when refineries are often cast in a negative light, Lion Oil is a favorite corporate citizen.

“We are committed to this community,” Cousins says, “and we back that up in our actions.”

That commitment was made clear when Lion Oil spearheaded the effort to preserve South Arkansas’ Sparta Aquifer. In the late 1990s, the aquifer was in danger of depletion from heavy use by industry and residents; Lion Oil alone consumed some 3.2 million gallons per day of aquifer water. Determined to preserve this valuable resource, Lion Oil teamed with Great Lakes Chemical Company to reuse two million gallons per day of that company’s wastewater. In recognition of their efforts, Lion Oil and Great Lakes were co-named the 2002 Corporate Conservationists of the Year by the Arkansas Wildlife Federation.

Next Lion Oil participated in a project that brought river water into the refinery, allowing Lion Oil to move completely off of the aquifer and to preserve high-quality drinking water for the present and future citizens of South Arkansas.

“Lion Oil has a lot to be proud of,” Steve Cousins says. “We have great reliability, we’re profitable in a challenging business environment, and we’re environmentally sound. But I think the thing we’re most proud of is providing high-quality, high-tech jobs for so many generations of so many families. It’s a privilege to be part of a company with this heritage and this future.”

It’s that strong heritage and bright future that make Lion Oil Company the mouse that roars.