Exxon Mobil slows Beaumont refinery expansion after slump in fuel demand - Beaumont Enterprise

By Barbara Powell and Kevin Crowley, Bloomberg

Published 7:02 pm CDT, Friday, June 12, 2020

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  The Exxon Mobil plant in Beaumont operates Tuesday. Jefferson County Judge Jeff Branick was somber in his daily updates inn reference to the economic impact locally of the current state of the oil and gas industry. Photo taken Tuesday, April 21, 2020 Kim Brent/The Enterprise less

  The Exxon Mobil plant in Beaumont operates Tuesday. Jefferson County Judge Jeff Branick was somber in his daily updates inn reference to the economic impact locally of the current state of the oil and gas ... more

  Photo: Kim Brent / The Enterprise

Photo: Kim Brent / The Enterprise

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The Exxon Mobil plant in Beaumont operates Tuesday. Jefferson County Judge Jeff Branick was somber in his daily updates inn reference to the economic impact locally of the current state of the oil and gas industry. Photo taken Tuesday, April 21, 2020 Kim Brent/The Enterprise less

The Exxon Mobil plant in Beaumont operates Tuesday. Jefferson County Judge Jeff Branick was somber in his daily updates inn reference to the economic impact locally of the current state of the oil and gas ... more

Photo: Kim Brent / The Enterprise

Exxon Mobil slows Beaumont refinery expansion after slump in fuel demand

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Exxon Mobil Corp. will delay the startup of its Beaumont refinery expansion by a year as the oil giant weathers low demand for petroleum products and seeks to save cash amid the coronavirus pandemic, people familiar with the plans said.

The project, which will make Beaumont the biggest refinery in the U.S., will now be up and running sometime in 2023, compared with a previous target of 2022, the people said.

Exxon is “evaluating all appropriate steps to significantly reduce capital and operating expenses in the near term as a result of market conditions caused by the COVID-19 pandemic and commodity price decreases,” spokesman Jeremy Eikenberry said in a statement. He declined to comment on individual projects.

Representatives with the company’s Beaumont operations stressed that while “timing of expansion plans for select downstream and chemical facilities across the company’s portfolio will be adjusted,” the Beaumont project is still ongoing.

Nakisha Burns, Beaumont area public and government affairs manager, said work was continuing at the site and two large modules were expected to be delivered through the Sabine-Neches Waterway by the end of the year.

“While we’re not commenting on specific projects at this time, Exxon Mobil expects to meet its projected investment of $20 billion on U.S. Gulf Coast manufacturing facilities made in its 2017 Growing the Gulf initiative,” Burns wrote in an email. “The company also expects to reach its proposed U.S. investment of $50 billion over five years announced in 2018.”

When Exxon Mobil launched the Growing the Gulf initiative, it said it would invest $20 billion in the U.S. Gulf Coast over 10 years.

By the time it’s complete, Beaumont’s daily refining capacity will be about 619,000 barrels a day, a 65% increase that will put it ahead of Saudi Aramco’s 607,000 barrel-a-day Motiva plant in Port Arthur.

A key reason for the expansion was to use crude from Exxon’s aggressive production ramp-up in the Permian Basin of West Texas and New Mexico. But the coronavirus pandemic caused the oil major to slash its 2020 capital spending plans 30%, with the Permian the largest component of the cutback, lessening the immediate need for an increase in refining capacity.

Despite the startup delay, construction of supporting slabs for the new units at Beaumont is continuing, and the pace of the work will accelerate in January, the people said. The refinery continues to run at reduced rates because of lower demand for its products like gasoline and jet fuel.

Exxon hasn’t given a cost estimate for the expansion, but has said it will add a unit with the capacity to process 250,000 barrels a day of light, low-sulfur crude, as well as supporting hydrotreaters, which remove sulfur from the fuel.

Before the shale boom, Gulf Coast refineries customized their equipment to process heavy, high-sulfur blends from places such as Canada, Venezuela and Mexico. But production growth from the Permian has been so strong that, before the pandemic, there was sometimes a lack of refining capacity for its light, low-sulfur crude.

Jacob Dick contributed to this report.

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https://www.beaumontenterprise.com/news/article/Exxon-Mobil-slows-Beaumont-refinery-expansion-15337180.php

2020-06-13 00:02:00Z
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