Exxon weighs letting Beaumont, Texas, refinery expansion slip into 2023

HOUSTON: Exxon Mobil Corp is considering slipping the completion of an expansion of its Beaumont, Texas, refinery by up to a year into 2023 because of the impact of the COVID-19 pandemic on oil demand, said sources familiar with the company's plans.

"Exxon Mobil 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," Exxon spokesman Jeremy Eikenberry said on Friday.

Eikenberry declined to comment on the Beaumont refinery expansion project, which will add a 250,000-barrel-per-day (bpd) crude distillation unit (CDU), boosting the refinery's capacity to 619,000 bpd.

Exxon said in April that it would slow spending on its $20 billion "Growing the Gulf Initiative," to expand downstream manufacturing in Texas and Louisiana, including the Beaumont refinery expansion.

The new CDU would make the Beaumont refinery the largest in the United States, surpassing the 607,000-bpd Motiva Enterprises Port Arthur, Texas, refinery by 12,000 bpd if the Motiva plant does not expand before the Exxon Beaumont project is completed.

The expansion, when formally announced in January 2019, was planned to take advantage of new crude supplies from Exxon's newly developed oil fields in the Permian Basin of Texas and New Mexico.

In April, Exxon announced it would also slow spending in development of the Permian.

Exxon began preparing the site of the new CDU in 2018, before the final decision to build the unit was made.

The CDU is being built in modules that will be assembled at the Beaumont refinery, the sources said.

CDUs do the initial breakdown of crude oil into hydrocarbon feedstocks for all other production units in the refinery, as well as producing unfinished motor fuels.