That ExxonMobil Story Posted Earlier Is A Huge, Huge Story -- Why Great Companies Stay Great -- Making America Great Again -- March 13, 2018

Re-posting this story. I think this may be the biggest story this month, perhaps this year (yes, I know I've said this about other stories also; and, yes, I'm inappropriately exuberant about the Bakken). Here's the post that was posted less than an hour ago:

XOM to expand Gulf Coast oil-refining expansion: Tillerson may be out, but XOM is not. Reuters confirms that it will expand Gulf Coast oil-refining. That's an understatement: in fact, XOM will double US light crude oil refining capacity along the US Gulf Coast. This is a very, very big story. US Gulf Coast refineries were optimized for heavy oil some years ago at great expense; I never thought Gulf Coast refiners would to back to light oil -- but apparently they've seen the writing on the wall: heavy oil is very, very iffy:

• huge amounts of light oil coming in from the Permian, Eagle Ford, and the Bakken
• Canadian heavy oil via Keystone XL is iffy
• Venezuelan heavy oil is iffy
• Saudi "heavy oil" is iffy

From the story:

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.

Now, why would I re-post it? Yes, it's a huge story, but I re-posted it because after posting it, I came across this from Financial Times. Things are moving so quickly it's hard for anyone to keep up. In this article, the Financial Times said exactly what the blog has been talking about for years: US Gulf Coast refineries are not optimized for light oil. The writer asks whether US shale will give the US industry "indigestion"? The worry: lighter crude may not mix with an industry used to processing heavier oil.

In the oil market, not all barrels are created equal. 

By the end of this year, the US oil industry will be pumping 11m barrels a day of crude, the highest in its history and more than either Russia or Saudi Arabia. These barrels, boosted by the shale revolution and increasingly exported, are seen as critical for keeping the market well supplied as a fast-growing global economy lifts demand for diesel, jet fuel and petrochemicals. 

But in the industry debate is growing, some would say concern, over just how well-suited the shale oil coming out of the US is for meeting this rising demand. The issue, critics say, is that US shale is far lighter — having been released through narrow fissures in rocks by hydraulic fracturing — than gloopy tarry crudes most people think of when they picture a barrel of oil. This has potentially huge implications because refiners, who turn crude into usable products, have spent decades investing in plants capable of processing far heavier oils that were once expected to dominate supply. 

The lighter shale barrels, some say, are just not as good for making the products — especially diesel, jet fuel and other so-called middle distillates — that the world increasingly needs. They warn of a potential crunch in years to come caused not by an outright shortage of crude, but by refiners scrambling to compete for more conventional barrels as US shale is found wanting.

Then this quote:

“The dirty secret of US shale oil is not many people want it,” says Bill Barnes of Pisgah Partners, an energy project development consultancy. “It’s wrong to say the US can add 1m-plus barrels a day of production capacity a year and it will immediately find a home in the world’s refining system.”

It sounds like Bill spoke too soon.

And that's why I re-posted the XOM story above.

By the way, the FT article has a nice graphic showing the refined products from the various US shale plays vs "Arab Light" and "Louisiana Light Sweet."