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Reuters via Newscred

Exxon adapts to light crude refining in Texas, could more follow?

Exxon Mobil will extend the capacity for processing light crude at its Beaumont, Texas, refinery in order to capitalize on U.S. production.

United Press International reported that Exxon intends to increase production capacity by roughly 6 percent (20,000 barrels per day) in order to take in more crude produced by the regional shale sector.

“This project will grow our capacity and flexibility to process light crude oils,” Jerry Wascom, president of ExxonMobil Refining and Supply Co., said in a statement. “Building on the recent increases in domestic oil and gas production, this investment further strengthens the competitiveness of the company’s strategic assets in North America and enhances U.S. energy security.”

Unfortunately, for many refining operations in the U.S. that are set up to process heavier crudes, oil pumped out of the various shale plays is a lighter petroleum. In addition, the current oil glut has caused near maximum capacity for refineries around the country, which has been the driving force for companies to push for U.S. exporting abilities.

The Senate Energy and Natural Resources Committee, in a 12-10 vote, voted last week to repeal a 1970s-era ban on crude oil exports. Committee Chair Sen. Lisa Murkowski, R-Alaska, said removing the ban would boost economic strength at home while advancing U.S. national security interests overseas.

However, a study conducted by the nonpartisan Congressional Research Service found that even some overseas refineries aren’t designed to handle the lighter oils from the United States. In addition, in-house refiners claim lifting the ban makes little sense because some U.S. markets would be forced to import more oil. Also, if the export ban remains, refineries would have to make capital investments to handle a large volume of lighter feedstocks.

“The increase in capacity at the Beaumont refinery is made possible in large part by abundant, affordable supplies of U.S. light crude from shale,” Wascom noted.

Refiners have been including more and lighter crude for nearly 25 years now.  In March, U.S. refineries processed the lightest combination of crude since April 1991, according to data from the U.S. Energy Information Administration (EIA).

However, for a long term strategy without the lifting of the oil export ban, refiners will need to invest in new distillation and secondary processing units, most of which are expensive. The refining system is running out of easy options for handling light oil. This could mean that substantial discounts between domestic and international crudes could re-emerge and even widen in the future.

9 comments

  1. So, does a 12 to 10 vote lift the ban?

    I’ve been saying lets just limit imports to spur the domestic market..

  2. The trading won’t be as profitable but it would sure would be better than it is now

  3. I live in Corpus Christi next to refinery row. I have been completing eagle ford oil wells for over five years. Why is it not already in place in Corpus to refine light oil? Or is it???

  4. All I know I’m buying stock on ExxonMobil

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