Big Time - Permian Majors Expand Downstream Crude Refining Capacity

In the past month, two integrated majors with strong footprints in the Permian Basin announced plans to increase their refining capacity along the Texas Gulf Coast. During the last week of January 2019, ExxonMobil announced a final investment decision to expand its Beaumont, TX, facility’s capacity by 250 Mb/d, making it the largest U.S. refinery, and then confirmed an investment with Plains All American and Lotus Midstream to build a 1-MMb/d pipeline to ship crude to its Beaumont and Baytown, TX, refineries. In the same week, Chevron announced its purchase of the 110-Mb/d Pasadena, TX, Houston Ship Channel refinery from Brazil’s national oil company, Petrobras. Both Exxon and Chevron boasted record Permian production in their fourth quarter 2018 earnings calls. Today, we review Chevron’s purchase and Exxon’s expansion in light of Permian production growth and the changing Gulf Coast refining market.

This blog is based on analysis originally published by Morningstar Commodities and Energy Research. You can download a copy here.

Independent producers and domestic refiners alike have enjoyed the bounty of cheap domestic shale oil since 2012. The latest investments by Exxon and Chevron suggest major oil companies are firmly placing their big-boy stamp on the shale turf and claiming it as their own. They are doing this by employing industrial-scale production techniques in the Permian to extract more for less over the long term. This strategy is an integral part of their exploration and production portfolio — just as valued as Exxon’s investment in offshore Guyana and Chevron’s continued investment in deepwater Gulf of Mexico plays. These investments in shale are now being consolidated into their vertically integrated operations through the expansion of their downstream refining capacity along the Gulf Coast.

To access the remainder of Big Time - Permian Majors Expand Downstream Crude Refining Capacity you must be logged as a RBN Backstage Pass™ subscriber.

Full access to the RBN Energy blog archive which includes any posting more than 5 days old is available only to RBN Backstage Pass™ subscribers. In addition to blog archive access, RBN Backstage Pass™ resources include Drill-Down Reports, Spotlight Reports, Spotcheck Indicators, Market Fundamentals Webcasts, Get-Togethers and more. If you have already purchased a subscription, be sure you are logged in For additional help or information, contact us at info@rbnenergy.com or 888-613-8874.