Interline�s new NorthCut Refining LLC operation will focus on local sweet light crude, which is in good supply.

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For Michael Williams, the key to succeeding in the oil and gas business has been tenacity. As he has worked in the energy industry for the last 27 years, he stayed strong and persevered where others would have been ready to throw in the towel. “Oil and gas has been an up and down business, requiring substantial financial resources and personnel,” he says. Williams is the chairman and CEO of Interline Resources Corp. , an Alpine, Utah-based firm that specializes in used oil refining, natural gas gathering, crude oil refining, crude oil gathering, and exploration and production.

Interline, the company explains, resulted from the Iranian political crisis of 1980. After the Iranian revolution in 1980, the United States was not able to trade with its Iranian crude oil supplier, resulting in restricted oil sales and a high cost of crude oil.

The U.S. government initially established tax incentives for investors drilling petroleum reserves. When the tax exemptions were later rescinded, many of the small exploration firms folded, including Quest Energy, of which Williams was an employee. “Natural gas fell to an all time low price after the government deregulated it,” he remembers.

This left many wells isolated in Colorado, Utah and Wyoming, where most companies did not have the know-how or personnel to build. In 1983, however, Williams founded Interline Natural Gas Inc., which operated with the goal to find and evaluate the stranded wells for hook-ups.

In 1984, Williams’ brother, Tim Williams, joined the company as its corporate legal counsel, along with Vice President of Engineering Gerry Brooks, who previously worked for Phillips 66.

Interline also completed several acquisitions, including the 1990 purchase of the Well Draw Gas Plant from GLG Energy. Located in Wyoming’s Powder River Basin, the plant was a natural gas processing refinery with the ability to process 25 million cubic feet per day.

To finance the plant, the company completed a reverse merger with a public shell to purchase the plant, and merged into Interline Resources Corp. Two years later, the company split itself into two subsidiaries: Interline Energy Services, which focused on traditional oil and gas projects including Well Draw, and Interline Hydrocarbon, which focused on regenerating used oil into lubricants. Interline Energy Services has now been reorganized as NorthCut Refining LLC.

New Facilities
Interline is now concentrating on strengthening its presence in the marketplace. In the past three years, the company has focused on converting the Well Draw Gas Plant into an appraised $75 million dollar crude oil refinery that will have a capacity to process up to 5,000 barrels of crude oil per day, Michael Williams says. “There are no small private or publicly owned companies that are building new crude oil refineries in the U.S.,” he says. “We are entering an exclusive club.”

The refinery – known as NorthCut Refining LLC – is not merely an expansion of the original gas plant. Instead, the 27-acre location will feature a new crude oil refining facility, including distillation towers that can process various mixes of crude oils.

The refinery is connected directly to Interline’s owned 200-mile crude gathering system. Interline is the majority owner, and owns 75 percent of NorthCut Refining LLC.

While construction of the refinery started in August 2007, “We’re hoping for a June 1 start,” Williams says. Interline will focus solely on local sweet light crude which is in plentiful supply.

Although he anticipates the refinery to start this June, the process was not easy, and required the tenacity that he has considered so integral. While the company suffered setbacks with two fires at Well Draw, “It took us over three years to permit and find financing for the construction of the NorthCut refinery,” he says. “Crude oil refining is a very, very difficult area to get into. [It] takes a lot of money, a lot of time and a lot of patience. Most companies would have just quit after the crushing obstacles Interline had to overcome.”

Interline stayed afloat as it sought funding and permitting approvals by selling non-essential assets. Ultimately, funding for the project was secured with a private sector loan, which will be repaid with 75 percent of NorthCut’s revenues until retired, Interline says.

Interline will add another used oil refinery in Mount Pleasant, W.Va.  He explains this facility will be the first fully operating Base Oil refinery using the patented Interline process in the United States. He says the budget for construction of the used oil refinery is $21 million, and should be operational by 2010.

He is proud of Interline’s achievements and the employees who never gave up. “Everybody told us we couldn’t build a refinery with our history,” he says. “I looked for funding for three straight years, eight hours a day, six days a week.” He expects the company to expand its used oil refineries in the United States and abroad.