Royal Dutch Shell and Aramco JV completes USD 10 billion expansion
Royal Dutch Shell and Saudi Aramco have unveiled the USD 10 billion expansion of their JV Motiva Enterprises Texas Gulf Coast refinery as it neared its top capacity taking the crown as the largest in the US.
Mr Peter Voser CEO of Shell said that “This ambitious expansion creates this country's largest refinery and one of the most advanced anywhere.”
With the completion of a new crude distillation unit and associated units, the refinery's newly minted 600,000 barrels per day capacity eclipses Exxon Mobil Corporation's 560,640 barrels per day Baytown, Texas, refinery, as the largest in the country. The refinery's pre expansion capacity was 285,000 barrels per day.
Mr Bob Pease president & CEO of Motiva said that Motiva also aims to increase fuel exports to up to 100,000 barrels per day once pipeline infrastructure from the plant to its docks is completed.
Last year the US became a net exporter for the first time since 1949, having shipped out 439,000 barrels per day more fuel than was imported. The Motiva project was launched in 2007, when US fuel demand was up and refinery capacity was seen as inadequate. That changed when the global financial crisis hit, slashing demand and prompting closures of several unprofitable refineries, particularly in the US Northeast.
Mr Khalid Al Falih president and CEO of Saudi Aramco said that Motiva suspended work on the project for about a year in late 2008 to rein in costs, but did not intend to abandon it. What had been estimated by analysts to be USD 7 billion project was in the end, a USD 10 billion project.
He said that rather than cut and run, we pressed ahead with our long term commitment. We're confident in the return on investment, despite the cost will be very healthy. Motiva Enterprises is a joint venture between Shell Oil, the US unit of Royal Dutch Shell and Saudi Aramco. The Port Arthur refinery is one of three Motiva plants in the US the other two being in Louisiana.
Mr Tom Purves VP of manufacturing of the expansion project said that the plant was closing in on its 600,000 barrels per day capacity sooner than expected. It would reach that capacity in the current quarter rather than the third quarter this year as previously expected. It's all in place.
The expansion gives Motiva the flexibility to run lower cost heavy oil from South America, Latin America and potentially from Canada, if the delayed Keystone XL pipeline is built. Other Gulf Coast refiners like Marathon Petroleum Corporation have completed similar expansions, while excess refining capacity in the distressed East Coast market has shut down.
Source - Reuters