Marathon Petroleum Corp. has abandoned plans for a multibillion-dollar upgrade to its Garyville refinery.
The residual oil upgrade expansion, or ROUX, project’s cost was estimated at $2.2 billion to $2.5 billion. The project would have allowed the refinery to convert heavy residual oil, a refinery byproduct, into roughly 1.2 million gallons of ultra-low sulfur diesel every day.
Marathon announced the project in April 2014, saying the final decision on whether to go forward would be made in early 2015. At the time, Rich Bedell, Marathon senior vice president for refining, said if the project got the green light, construction could begin in mid-2015 and finish in 2018.
But in February, Marathon announced it would delay the final investment decision to evaluate the implications of market conditions.
The St. John the Baptist Parish project would have created 65 new direct jobs, with an average annual salary of $115,000 per year, plus benefits, Louisiana’s economic development department reported in 2014. The project would have supported 3,000 construction jobs.
The project would have been the second massive expansion at the Garyville refinery. In 2009, Marathon completed a $3.9 billion project to nearly double its capacity. The refinery now can handle 522,000 barrels of oil per day.
“While we still believe the ROUX is an excellent project to enhance MPC’s platform, we constantly evaluate market conditions, and at this time, we have decided to cancel the project,” President and Chief Executive Officer Gary Heminger said in a statement.
Instead, Marathon will put its cash into projects that offer a better return. Marathon took a $144 million charge in the third quarter to write off the refinery upgrade’s costs, which included front-end engineering and equipment.
The refinery is on about 3,500 acres adjacent to U.S. 61 and the Mississippi River. It has 850 employees and 650 contract workers, according to the company’s website.