Exxon begins preparing Texas refinery for shale oil expansion

HOUSTON (Reuters) - Exxon Mobil Corp has begun groundwork at a Texas refinery that would become the largest in the United States in advance of a final investment decision on the expansion, three sources familiar with Exxon’s plans said.

The company also has begun hiring and training staff to operate what would be a third crude distillation unit at the site. The expansion would increase crude processing capacity at its Beaumont, Texas, refinery by at least 300,000 barrels per day (bpd) from the current 365,644 bpd, the sources said.

The proposed unit would convert crude oil from Texas shale fields into refined products, including diesel and gasoline. Exxon wants to triple daily crude production in the Permian Basin of West Texas and New Mexico to 600,000 barrels of oil equivalent by 2025.

Initial work has begun and construction of the crude unit is scheduled to start next year after a final investment decision, with processing beginning by 2022, spokeswoman Sarah Nordin confirmed in an email this week.

“The company is proceeding with front-end engineering, design and other preparatory work to further increase the refinery’s crude refining capacity,” Nordin said.

Nordin did not describe specific steps being taken at the refinery to prepare for the new crude unit, which is part of a $20 billion program to expand its U.S. Gulf Coast manufacturing over 10 years.

The refinery added an initial eight operators, who are gaining experience working on the two existing crude units. They will move over to the new processing unit after it is built, the sources said.

“They’re building up the soil 10 to 14 feet (3 to 4.3 meters),” one of the sources said.

The ground-level increase would place the base of the new crude unit above the level of Harvey’s flood waters.

Exxon also is taking steps to increase crude delivery. It has agreed to join with Plains All American Pipeline LP on a pipeline to carry 1 million barrels per day of crude oil from the Permian Basin to Exxon refineries along the U.S. Gulf Coast.

Exxon is not the only refiner looking to expand along the U.S. Gulf Coast. Saudi Arabia’s Motiva Enterprises [MOTIV.UL] is seeking to buy or build another U.S. refinery and Chevron Corp recently said it is considering adding a refinery on the western U.S. Gulf Coast.

Motiva’s 603,000 bpd plant in Port Arthur, Texas, currently is the largest in the United States. With the Exxon expansion, the Beaumont refinery would surpass Motiva’s capacity.

Reporting by Erwin Seba; Editing by Bill Berkrot

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