Exxon top executive confirms Gulf Coast oil-refining expansion

Global Stock Markets

A top Exxon Mobil Corp (XOM.N) official confirmed a multi-billion dollar plan under consideration to double U.S. light crude oil refining capacity along the U.S. Gulf Coast to take advantage of the nation’s growing shale oil production. 

Exxon’s proposed project, which has not received a final investment decision, would be the first major expansion of gasoline and motor fuels production in the nation in six years. 

Exxon’s Beaumont, Texas refinery could become the nation’s largest by capacity when the work is complete in the next decade. 

Exxon expects to add a crude distillation unit (CDU) at its 362,300 barrel per day (bpd) Beaumont refinery and boost refining capacity at plants in Baytown, Texas and Baton Rouge, Louisiana, Senior Vice President Jack Williams said in a presentation to Wall Street analysts last week. 

Sources familiar with Exxon’s plans said that the company was near a final investment decision for a project to expand crude oil processing capacity at the Beaumont refinery to as much as 850,000 bpd. 

Williams said the project would increase the integration of Exxon’s Gulf Coast operations by supplying its Baton Rouge and Baytown refineries with products made at Beaumont, reducing third-party purchases. 

He called the plan“perhaps my favourite example on integration” because it couples production and refining across business groups. 

Exxon plans to invest $9 billion in six refinery projects globally in the next eight years and forecasts returns from its downstream to grow by 20 percent on average, the company said. 

The expansion would offer a new outlet for the rising shale oil production from the Permian Basin in west Texas and New Mexico, which is expected to overwhelm U.S. refining capacity in the next few years, said an analyst from energy consultancy IHS Markit.