Western Oil & Gas Company: Strategic Financing for Energy Efficiency

This case study examines a proposed $2 million motor system upgrade at the Western Oil & Gas Company refinery in Richmond, California. Despite potential energy efficiency and reliability gains, the project faced internal hurdles including high operational risks, low strategic priority, and capital constraints due to other regulatory expenditures. The document explores how the involvement of an energy services company (ESCo) and a specialized financing firm provided the technical expertise and alternative funding structures—such as performance-based financing—necessary to make the project viable.

• Western Oil & Gas Company considered a $2 million capital improvement project to upgrade motor systems at its Richmond, California refinery to improve energy efficiency and equipment reliability, but initially deemed it unwise because the diversion of resources risked disrupting 24-hour plant operations.
• The technical upgrade focused on the 'diesel hydro treater' (DHT), replacing constant speed motors with electric variable speed drive (VSD) motors on the 2,250-hp primary feed pump and 700-hp product pump to reduce wasted energy and vibration.
• Internal implementation was hindered by a lack of coordination between chemical and electrical engineers, a lack of clear responsibility for energy efficiency at the plant level, and a corporate environment where environmental regulation projects had crowded out other spending.
• In 1995, Western committed nearly $1 billion to upgrade refinery production to comply with California clean air regulations, specifically for the incorporation of MBTE into gasoline, which limited the availability of internal funds for non-critical projects.
• The project was supported by a demand-side management (DSM) program from Pacific Gas & Electric (PG&E), which provided subsidies to reduce regional electricity demand. Energy Services, an ESCo, held a six-year contract with PG&E starting in 1994 to provide 23 million kWh of annual 'negawatt' savings.
• A feasibility study conducted by Energy Services estimated the project would cost $2 million and generate energy savings of approximately 31 million kWh per year, while reducing peak demand by 1 million kW per year.
• The document outlines three financing options: internal financing, lease financing through ABB Energy Capital, and performance-based financing (shared savings), where the ESCo bears the performance risk and the loan is potentially off-balance-sheet for the end-user.

APA

Briscoe, F., Sanusi, H., & Archampong, O. (2002). Western Oil & Gas Company: Strategic Financing for Energy Efficiency. World Resources Institute. https://pdf.wri.org/bell/case_1-56978-448-8_full_version_english.pdf

Chicago

Briscoe, Forrest, Hakeem Sanusi, and Opoku Archampong. Western Oil & Gas Company: Strategic Financing for Energy Efficiency. World Resources Institute, 2002. https://pdf.wri.org/bell/case_1-56978-448-8_full_version_english.pdf.

Wikipedia

{{cite report |last1=Briscoe |first1=Forrest |last2=Sanusi |first2=Hakeem |last3=Archampong |first3=Opoku |title=Western Oil & Gas Company: Strategic Financing for Energy Efficiency |publisher=World Resources Institute |date=2002 |url=https://pdf.wri.org/bell/case_1-56978-448-8_full_version_english.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{briscoe2002western, author = {Briscoe, Forrest and Sanusi, Hakeem and Archampong, Opoku}, title = {{Western Oil \& Gas Company: Strategic Financing for Energy Efficiency}}, institution = {World Resources Institute}, year = {2002}, url = {https://pdf.wri.org/bell/case_1-56978-448-8_full_version_english.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }