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  • By The Financial District

Exxon Starts Production From Expanded $2-B Texas Refinery

Exxon Mobil Corp. in coming days will sharply boost gasoline and diesel production at its Beaumont, Texas, refinery, people familiar with the matter said, completing a $2 billion expansion first considered nine years ago, Erwin Seba reported for Reuters.


Photo Insert: Initial startup of a 250,000 barrels per day (bpd) crude distillation unit (CDU) at the 369,000 bpd refinery is expected by Jan. 31, the sources said, making the Beaumont refinery, the second largest in the US.



Initial startup of a 250,000 barrels per day (bpd) crude distillation unit (CDU) at the 369,000 bpd refinery is expected by Jan. 31, the sources said, making the Beaumont refinery, the second largest in the United States.


It is the first major expansion to US oil processing in nearly a decade, adding the equivalent of a mid-sized refinery, and coming online as scheduled at a time when US President Joe Biden has been urging refiners to produce more fuels, or face penalties.



Exxon has previously said the unit will start production in the first quarter of this year. "Construction of the new crude unit is completed. We have initiated startup procedures and commissioning is underway," said Exxon spokesperson Chevalier Gray in an emailed statement.


"The unit will add 250,000 barrels per day of all new supply for the refined products market."


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US stockpiles of diesel and gasoline are near five-year lows, and profit margins for producing motor fuels in the US Gulf Coast region are near record levels. Refiners are earning about $35.40 per barrel using the industry's crack spread, a profit measure that compares the cost of crude oil to sale prices for gasoline and diesel, according to Refinitiv.


"Right now, margins are sensational," said Garfield Miller, president of refining investment banker Aegis Energy Advisers Corp.


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"These margins tell you that as far as the US Gulf Coast is concerned, there is plenty of demand relative to supply."


The new CDU, called the Beaumont Light Atmospheric Distillation Expansion (BLADE) project, was under consideration as early as 2014 and formally approved in 2019. It is planned to process Exxon's crude oil pumped from the Permian shale field in West Texas and New Mexico.


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Exxon said on Friday the total cost of BLADE is $2 billion. In a filing posted on Sept. 28 with the Texas Comptroller's office in support of property tax reductions, the company said its total cumulative investment was $1.2 billion.


Turning on the new equipment will not immediately generate big new volumes of gasoline and diesel. Exxon plans to bring the new CDU up slowly to deal with potential startup problems, the people said.



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