Turns heavy crude oil into fuels at two Kansas refineries while making nitrogen fertilizer from the same site's waste gases.
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- Depends onUpstream position: supplies 5 industries, depends on 0
- ScaleMarket cap is above the global median
Turns heavy crude oil into fuels at two Kansas refineries while making nitrogen fertilizer from the same site's waste gases.
CVR Energy runs two refineries in Kansas and Oklahoma that convert heavy crude oil into gasoline, diesel, and jet fuel, while also producing nitrogen fertilizer at the Coffeyville site using hydrogen gas and steam that are byproducts of the refining process rather than separately purchased inputs. Because the fertilizer plant draws its hydrogen and steam directly from the refinery's conversion units, the two operations share the same boilers and utility infrastructure — which keeps the fertilizer plant's costs well below what a standalone facility would pay, but also means a single failure in that shared infrastructure shuts down both production lines at once. The refineries themselves are capped at 115,000 and 70,000 barrels per day by their physical vessels and distillation towers, and raising either limit would require rebuilding those vessels, new environmental permits, and recertifying the shared utility systems the fertilizer plant depends on — so growth is effectively frozen at current engineering limits. On top of that, fertilizer revenues rise and fall with crop prices, and refinery margins shift with how much crude is flowing out of the Bakken and Permian fields and what that crude costs in the Mid-Continent market, meaning both sides of the business move with forces the company cannot control.
How does this company make money?
The company earns money on each barrel of crude it refines by selling gasoline, diesel, and jet fuel at a higher price than the crude cost — that gap is called a crack spread. It also sells urea and ammonia fertilizers by the ton, mostly to agricultural distributors and merchant traders. Both revenue streams run simultaneously from the same Coffeyville site.
What makes this company hard to replace?
Crude oil pipeline operators hold multi-year supply contracts with the refineries, making it costly for an alternative refinery to step in quickly. Local agricultural dealers have standing credit arrangements and seasonal inventory agreements built around this company's fertilizer supply, which take time and negotiation to rebuild with a new supplier. Fuel sold in Kansas must meet state specifications, and a new supplier would have to go through a requalification period before its product is approved — meaning switching is not just a matter of finding another seller.
What limits this company?
The Coffeyville refinery can process at most 115,000 barrels of crude per day, and the Wynnewood refinery at most 70,000 barrels per day. Those numbers are fixed by the size of the physical pressure vessels and distillation towers already in the ground. Raising either limit would mean tearing out and rebuilding those vessels, going through a multi-year permitting process with the Kansas Department of Health and Environment, and recertifying all the shared utility systems that the fertilizer plant also relies on.
What does this company depend on?
The company cannot operate without crude oil delivered through the Wood River and Cushing pipeline systems, natural gas supply contracts that feed the fertilizer production process, MAGELLAN and NuStar pipeline access to move finished fuels to market, air permits issued by the Kansas Department of Health and Environment, and BNSF rail access to ship fertilizer to customers.
Who depends on this company?
Gasoline stations across Kansas and Oklahoma would face supply shortages during peak summer driving season if the refineries stopped. Agricultural distributors across the Mid-Continent would lose their local source of urea for spring planting, the most critical period of the farming calendar. Tulsa International Airport and nearby regional airports would need to find alternative sources of jet fuel.
How does this company scale?
Once a fuel blend or a fertilizer formulation is in production, each additional batch comes out the same way at no extra complexity. What cannot scale is the hardware: the refinery conversion units and the ammonia synthesis reactor are built to fixed engineering limits, and producing more means rebuilding the pressure vessels and distillation towers from scratch.
What external forces can significantly affect this company?
The Renewable Fuel Standard requires a set percentage of ethanol to be blended into gasoline, which changes how the refinery has to configure its product output and affects the economics of each barrel. Fertilizer demand and pricing rise and fall with agricultural commodity cycles — when crop prices drop, farmers buy less fertilizer. Growth in crude oil production from the Bakken and Permian fields shifts how much crude is available in the Mid-Continent and at what price, directly affecting what the refineries pay for their main raw material.
Where is this company structurally vulnerable?
If the shared boilers, steam headers, or hydrogen recovery units at Coffeyville shut down unexpectedly — or if the Kansas Department of Health and Environment forces a curtailment of the air permits — both the refinery and the fertilizer plant lose their common inputs at the same moment. Neither operation can keep running independently, and the cost advantage that justifies the whole setup disappears until the shared infrastructure is repaired.
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