A New Tag: Refinery_Light -- February 6, 2019

This is really, really cool. Regular readers know the story behind the heavy oil - light oil - Keystone XL story.

About a week ago, January 31, 2019, I noted that the solution to the problem: the majors need to build American refineries optimized for light oil. At that link it was noted that Chevron will acquire a refinery to  do just that:

Chevron will acquire all the outstanding shares and equity interests of Pasadena Refining System, which includes the Texas refinery with 110,000 b/d of nameplate capacity and associated trading arm PRSI.

The deal is expected to close by June 2019.

"This expansion of our Gulf Coast refining system enables Chevron to process more domestic light crude, supply a portion of our retail market in Texas and Louisiana with Chevron-produced products, and realize synergies through coordination with our refinery in Pascagoula," said Pierre Breber, Executive Vice President of Chevron Downstream and Chemicals.

Now this. On that same day, I posted a story about a new million-bbl pipeline from the Permian to the coast. It turns out there is more to the story. From oilprice:

But the pipeline also came after Exxon gave a separate final investment decision on another project.

On Tuesday, the oil major said it was moving forward on a near-doubling of its Beaumont, Texas refinery, adding a 250,000-bpd crude unit that would process light sweet oil from the Permian. The facility already has the capacity to refine 365,644 bpd, and the expansion could make Exxon’s Beaumont facility the largest refinery in the country. Saudi Aramco’s Motiva Enterprises refinery in Port Arthur currently ranks in the top spot with a capacity of 603,000 bpd. Once Exxon is finished with its expansion – slated for 2022 – the Beaumont facility will have a capacity of 615,644 bpd.

Even that is only part of Exxon’s plans for the region. Last year, Exxon unveiled its “Growing the Gulf” campaign, which consisted of massive refinery expansions on the Gulf Coast, including in Baytown, Beaumont and Baton Rouge. The entire initiative included $20 billion in planned spending across 11 refining, chemical and petrochemical projects along the Gulf Coast over a 10-year period.

The refinery expansions should be viewed in the context of Exxon’s plunge into the Permian. After arriving late to the scene, ExxonMobil has quickly become one of the largest shale drillers in West Texas and New Mexico. In early 2017, Exxon spent nearly $6 billion to acquire huge tracts in the Permian, which doubled the company’s holdings in the basin. 

Put this in the context of Saudi Arabia's woes and it's an even bigger story. 

And then this reminder: Rystad Energy names ExxonMobil the top oil, gas producer of 2018.