ExxonMobil Adds Big New Refining Capacity In Beaumont

Despite ongoing conflicting signals coming from President Joe Biden and some of his senior officials, ExxonMobilXOM
announced Thursday that it has successfully started up a large expansion of its Beaumont Refinery. The expansion will add 250,000 barrels of oil per day of new refining capacity, the equivalent of starting up a large greenfield refinery.

“ExxonMobil maintained its commitment to the Beaumont expansion even through the lows of the pandemic, knowing consumer demand would return and new capacity would be critical in the post-pandemic economic recovery,” Karen McKee, president of ExxonMobil Product Solutions, said in a release. “The new crude unit enables us to produce even more transportation fuels at a time when demand is surging. This expansion is the equivalent of a medium-sized refinery and is a key part of our plans to provide society with reliable, affordable energy products.”

The new capacity would seem to satisfy at least one of the President’s criticisms of the industry, which has been an allegation that it has intentionally been under-producing gasoline during peak driving times of the year. That criticism arose during late 2021 and has been repeated by Biden and his senior officials often since, without much supporting evidence.

At the same time, though, the President, Energy Secretary Jennifer Granholm and other senior administration appointees have also repeated a mantra claiming that the U.S. will only need oil and refined products for another 10 years or so, a talking point Biden even included in his State of the Union address. Sec. Granholm appeared to modify that position during her recent speech at CERAWeek, in which she acknowledged that even “the boldest projections for clean energy deployment suggest that in the middle of the century we are going to be using abated fossil fuels.”

But if that’s the administration’s new position on the remaining longevity for the domestic oil industry, someone forgot to tell the President himself. Mr. Biden was back on the 10-year life projection during this week’s sit-down on Comedy Central’s “The Daily Show” with host Kal Penn. In that interview, the President conceded “we’re gonna need fossil fuel for at least 10 more years,” but claimed the U.S. could eliminate use of coal even sooner.

Mixed signals like these coming from the White House and uncertainties about which direction voters will decide to take the country in 2024 undoubtedly have a chilling effect on investors’ willingness to fund long-term projects related to fossil fuels. Given that the permitting, construction and start-up of a large-scale new, greenfield refining operation in the U.S. would certainly take well more than a decade to complete, no company would dream of even attempting to mount such a project.

But expansions like this one in Beaumont, though expensive, are less time-intensive. ExxonMobil says this expansion project started in 2019, and involved 1,700 contractors across its 4-year timeframe. With the added capacity, the Beaumont Refinery becomes one of the nation’s largest, now capable of processing 630,000 barrels of oil per day into refined products including diesel, gasoline and jet fuel.

Bottom Line: Combined with this week’s partial approval of the Willow Project to be mounted by ConocoPhillipsCOP
in the National Petroleum Reserve-Alaska, Exxon’s Beaumont expansion shows a domestic industry still intent upon and able to keep growing even in the face of confusing signals coming out of the nation’s capital.

Students of the industry’s history know that having to operate and grow amid confusing signals from government is nothing new in the oil and gas business. The only thing new in the current administration is the intensity of the signals, and the rising frequency with which they are being sent.