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Little Old Lady From Pasadena - Chevron's 105-Year-Old Texas Refinery Gets a New Lease on Life

More than 15 years into the Shale Era, the U.S. refining sector’s response to burgeoning production of light, sweet crude oil continues. Earlier this month, Chevron completed the long-planned, $400 million renovation and expansion of the century-old refinery in Pasadena, TX, which the company acquired from Petrobras in 2019. In today’s RBN blog, we discuss the refinery’s extensive history, why Chevron bought the facility five years ago, and how the just-finished project will enable the integrated oil and gas giant to make fuller use of its Permian oil bounty. 

Way back in 1917, Crown Oil & Refining Co. struck oil at Well #3 in the Goose Creek Field, just south of what is now Baytown, TX, and two years later it started up a new refinery alongside the Houston Ship Channel in nearby Pasadena (see photo below). After initially focusing on producing lube oil, the company — renamed Crown Central Petroleum — in 1925 expanded into gasoline production and during World War II pioneered the production of 100-octane aviation fuel for warplanes. Fast forward to 2004, when Crown sold the refinery to Astra Oil Trading, a Belgian company, and 2006 and 2008, when Petróleo Brasileiro (aka Petrobras), Brazil’s state-owned oil and gas company, initially purchased a 50% stake in the facility and its 466-acre site and subsequently acquired the entire plant.

Crown Oil & Refining’s Pasadena Refinery in 1919

Crown Oil & Refining’s Pasadena Refinery in 1919. Source: Chevron

Petrobras paid a hefty price — just over $1 billion — for the 100 Mb/d, channel-side refinery, more than 5 MMbbl of onsite storage capacity and associated connections to crude oil and refined products pipelines.

As we discussed in Big Time, Chevron in May 2019 bought the Pasadena refinery for only $350 million, a cut-rate purchase price partly attributable to the refinery’s small size (rated at 110 Mb/d at the time of the transaction), its relative lack of sophisticated equipment to process favorably priced heavy crude, its unimpressive economic performance (the lowest refining margins of the five refineries along the Houston Ship Channel), and a history of poor operations, including some notable casualty events. The acquisition gave Chevron a total of five U.S. refineries with a combined capacity of nearly 1.1 MMb/d, the others being Pascagoula, MS (375 Mb/d); El Segundo, CA (291 Mb/d); Richmond, CA (257 Mb/d); and Salt Lake City (58 Mb/d).

Chevron’s plan for the then newly acquired Pasadena refinery — aka Pasadena Refining System Inc. (PRSI) — was to (1) refurbish and expand the refinery; (2) use it to process increasing volumes of equity crude from Chevron’s wells in the Permian and the Eagle Ford (though it later sold its Eagle Ford assets); (3) integrate its operations with those of the company’s larger, more complex refinery in Pascagoula; and (4) distribute a portion of the Pasadena facility’s refined products output via the Colonial and Explorer pipeline systems and export the rest. (Figure 1 below — from a 2019 Chevron presentation — illustrates the still-intact plan). 

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