ExxonMobil Beaumont Refinery in Beaumont, Texas.
ExxonMobil
Despite persistent conflicting signals coming from President Joe Biden and some of his senior officials, ExxonMobil
XOM
announced on Thursday that it has successfully launched a major expansion of its Beaumont refinery. The expansion will bring 250,000 barrels of oil per day of new refining capacity, the equivalent of starting a major greenfield refinery.
“ExxonMobil has maintained its commitment to expansion in Beaumont despite the lows of the pandemic, knowing that consumer demand will return and new capacity will be critical to post-pandemic economic recovery,” Karen McKee, president of ExxonMobil Product Solutions, he said in release. “The new unit of oil allows us to produce even more transportation fuels at a time when demand is growing rapidly. This expansion is the equivalent of a medium-sized refinery and is a key part of our plans to provide the company with reliable and affordable energy products.”
The new capacity appears to have satisfied at least one of the president’s complaints against the industry, which was that it deliberately underproduced gasoline at peak times of the year. This criticism surfaced in late 2021 and has been repeated frequently by Biden and his senior officials since then, without much supporting evidence.
At the same time, however, the president, Energy Secretary Jennifer Granholm and other senior administration officials have also repeated the mantra that the US will only need oil and refined products for the next 10 years or so, which Biden even included in his State of the Union Address. Sec. Granholm appeared to modify this position during his recent speech at CERAWeek, in which she acknowledged that even “the boldest projections for the deployment of clean energy suggest that we will be using muted fossil fuels by mid-century.”
But if this is the administration’s new stance on the remaining longevity of the domestic oil industry, someone forgot to tell the president himself. Mr. Biden was back on the 10-year projection of life during this week’s session on Comedy Central’s “The Daily Show” with host Kal Penn. In that interview, the president admitted that “we’re going to need fossil fuels for at least another 10 years,” but argued that the U.S. could eliminate coal use even sooner.
Mixed signals like these coming from the White House and uncertainty about the direction voters will choose to take the country in 2024 are undoubtedly having a chilling effect on investors’ willingness to finance long-term fossil fuel-related projects. Given that it would certainly take more than a decade to permit, build, and start operating a large-scale new greenfield refinery in the U.S., no company would dream of attempting such a project.
But extensions like this one in Beaumont are expensive but less time-consuming. ExxonMobil says this expansion project began in 2019 and involved 1,700 contractors over a four-year period. With the added capacity, Beaumont’s refinery becomes one of the largest in the country, now capable of processing 630,000 barrels of crude 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 installed by ConocoPhillips
COP
in the National Petroleum Reserve-Alaska exxon Beaumont shows that the domestic industry is still determined and able to continue growing despite the confusing signals coming from the nation’s capital.
Students of the history of the industry know that having to operate and grow amid confusing signals from the government is nothing new in the oil and gas business. The only novelty in the current administration is the intensity of the signals and the increasing frequency with which they are broadcast.
