The refinery expansion gives Exxon a guaranteed outlet for oil produced in the Permian...
The expansion of the Exxon Mobil plant in Beaumont, about a 90-minute drive from Houston, gives Exxon a guaranteed outlet for oil produced in the Permian Basin in West Texas and New Mexico.When Exxon Mobil Corp.’s newest addition to its southeast Texas refinery ramps up to full production in the next few weeks, it’ll be the first major expansion of US fuel-making capacity in at least a decade. And probably the last.
Exxon’s feat is unlikely to be replicated, given the industry-wide push to reduce carbon footprints and concurrent refinery construction across Africa, the Middle East and Asia that’ll swell global oil-processing capacity. In the US, gasoline consumption already has peaked, reducing any incentive for refiners to spend billions expanding output.Even as US rivals like Marathon Petroleum Corp. and Valero Energy Corp.
But for Exxon, the mathematics of what a bigger Beaumont would mean for its bottom line were compelling. Despite what was transpiring in the wider world of refining, Exxon’s Permian crude was so cheap to produce and inexpensive to haul to the plant that the investment was justified, said Chief Executive Officer Darren Woods.
In contrast, Exxon’s smaller rivals are engaged in less ambitious projects. Marathon Petroleum is close to completing an expansion of its Galveston Bay refinery that will add 40,000 barrels of daily crude capacity. Meanwhile, Valero is scheduled to add 100,000 barrels of daily capacity to its Port Arthur complex.
“When Exxon conceived the expansion, I’m sure it was about feedstock,” said Amrita Sen, co-founder and director of research at London consultancy Energy Aspects. “Now it’s more about refinery shortages.”
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