ExxonMobil to delay Beaumont refinery expansion by a year

ExxonMobil to delay Beaumont refinery expansion by a year

US chemical firm ExxonMobil Corp. says it will delay the start-up of its Beaumont refinery expansion by a year due to the low demand for petroleum products. The project, which will make Beaumont the biggest refinery in the US, is expected to start up sometime in 2023, compared with a previous target of 2022, according to a Bloomberg report.

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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.

When ExxonMobil launched the Growing the Gulf initiative, it said it would invest US$20 billion in the US Gulf Coast over ten 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 pandemic has 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 delay, construction of supporting slabs for the new units at Beaumont is continuing, and the pace of the work will accelerate in January, Bloomberg said. The refinery continues to run at reduced rates because of lower demand for its products like gasoline and jet fuel.

ExxonMobil will also add a unit with the capacity to process 250,000 barrels a day of light, low-sulphur crude, as well as supporting hydrotreaters, which remove sulphur from the fuel.

Before the shale boom, Gulf Coast refineries customised their equipment to process heavy, high-sulphur 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-sulphur crude.