Exclusive: Exxon eyes expanding Texas refinery into biggest in U.S. - sources

Fri Jul 25, 2014 3:36pm EDT
 
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By Erwin Seba

HOUSTON (Reuters) - Exxon Mobil Corp is considering a multibillion-dollar plan to expand its Beaumont, Texas, refinery into the country's largest, the first major refining investment of the U.S. shale oil boom, people with knowledge of the deliberations said.

The expansion of the 344,600 barrel-per-day (bpd) Beaumont refinery, if carried out, would be completed by 2020 and potentially double its size with the addition of a third crude distillation unit (CDU), the sources said. More modest near-term projects to renew and expand so-called coking units to help refine more heavy crude already are under way, they said.

If Exxon presses ahead, the investment would be a further indication that the American oil giant is breaking ranks with many of its big global rivals, who have been looking to sell off refining assets across the world. Just weeks ago Exxon unveiled a $1 billion investment in its Antwerp plant.

An Exxon spokesman, while declining to discuss possible plans for the Beaumont refinery, said the company was always evaluating growth options.

"We regularly evaluate our global portfolio of businesses and opportunities for growth, depending upon the fit with its strategic business objectives," Exxon spokesman Todd Spitler said. "We take a disciplined long-term approach to investing, regardless of the economic cycle."

A bigger Beaumont would bolster the U.S. Gulf Coast's position as a top global supplier of gasoline and diesel at a time when domestic demand is falling. Profits for Gulf Coast refiners have swollen as cheaper North American crude allows them to capture big margins when exporting refined products.

U.S. oil production has embarked on an unprecedented 50 percent rise over the past four years as new drilling techniques allowed oil to flow from vast shale reserves in North Dakota and Texas - this after two decades of seemingly irreversible decline.

The sources said Exxon already was moving forward on plans to replace four coking unit drums in 2015 and add two new coker drums in 2017 at the Beaumont refinery. The drums turn residual crude oil into petroleum coke, a coal substitute.   Continued...

 
An Exxon gas station is pictured in Arlington, Virginia January 31, 2012. REUTERS/Jason Reed