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ExxonMobil is weighing a possible multi-billion dollar expansion of its 344,000 barrel per day Beaumont, Tex. refinery that could make it the largest in
the U.S. by 2020, Reuters reports.
The potential expansion to 700K-800K bbl/day in total
refinery capacity at Beaumont, which would surpass Motiva's 600K-plus bbl/day Port Arthur refinery.
Exxon Mobil is
focusing on the possible addition of a third crude distillation unit at the
refinery, and its size would determine how much capacity would increase; the
plans also would include replacing four coking unit drums and adding two new
coker drums. The drums turn residual crude oil into petroleum coke, a coal substitute.
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.
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, Belgium refinery.
The Beaumont refinery has two crude distillation units (CDUs) that do the initial refining of crude oil coming into the refinery and provide feedstock for all other units.
Exxon officials are considering boosting the Beaumont refinery’s size to at least 500,000 bpd, which is close to the capacity of the company’s Baton Rouge, Louisiana, refinery.
The country's biggest refinery is Motiva Enterprises LLC's 600,250 bpd Port Arthur, Texas, plant. Exxon is considering making the Beaumont plant bigger than Motiva's Port Arthur refinery.
"They've talked between 700,000 and 800,000 bpd in total refinery capacity," one of the sources said.
Andy Lipow, president of Lipow Oil Associates LLC, a Houston consultancy, said:
"Given the increase in North American oil production and in conjunction with the low operating cost due to the price of natural gas, it seems increasing the capacity of oil refining facilities makes a lot of sense," Lipow said.