Higher oil price stirs only guarded optimism in Louisiana’s oil patch as uncertainty looms _lowres

Advocate staff photo by Richard Alan Hannon Aerial view of ExxonMobil Refinery in Baton Rouge. 

Exxon Mobil Corp. is considering a multibillion-dollar expansion plan that would double U.S. oil refining capacity along the Gulf Coast, a move that could boost refining capacity at the Baton Rouge refinery.

Reuters reported and an Exxon official confirmed the plan, which could make the oil giant’s Beaumont, Texas, refinery the nation’s largest by capacity when the work is complete in the next decade. The plan comes amid increasing domestic shale oil production, particularly in Texas.

Exxon Baton Rouge spokeswoman Stephanie Cargile confirmed the company is evaluating potential expansion of light crude refining capacity in North America, and she said the Beaumont refinery is being considered but that no decisions have been made.

If it moved forward, construction would begin in 2019 and would create 40 to 60 permanent jobs, along with 1,850 construction jobs, Cargile said.

“Locally, we can share the ExxonMobil Baton Rouge is a highly integrated organization, and our sites are well-positioned to compete for future projects,” she said. “We want Louisiana to be competitive for future investment that ExxonMobil may be considering here.”

The project would supply the firm's Baton Rouge and Baytown refineries with products made at Beaumont, according to the Reuters report, reducing third-party purchases.

The project has not received a final investment decision but would be the first major expansion of gasoline and motor fuels production in the U.S. in six years, according to the news outlet.

The plan aims to satisfy the refining demand from fast-rising U.S. shale oil production, which is expected to overwhelm domestic refining capacity in the next few years, an analyst with energy consultancy IHS Markit told Reuters.

Exxon's CEO had said in January that the oil company will invest more than $50 billion over the next five years to expand its business in the U.S., including new manufacturing plants and expansion of current operations as well as more oil production.

Chairman and CEO Darren Woods said the new investments are in addition to Exxon's $20 billion plan to build refining, chemical and export facilities along the Gulf Coast over 10 years, which already has benefited Baton Rouge.

A program underway since 2013 already has included $200 million to expand the company's chemical and lubricants complex in Baton Rouge, which is already one of the world's largest petrochemical hubs. Project investments by ExxonMobil in Baton Rouge in 2017 totaled about $340 million and included projects at all five local facilities, the company recently reported.

Over the past three years, more than $1 billion in capital projects has been invested in Baton Rouge-area facilities, helping retain more than 6,500 local employees and contractors.

Woods said said in January that the additional $50 billion in investments are possible because of the company's strength, helped by the recent law that cut taxes on corporations. In a blog on Exxon's website, Woods said Exxon plans to increase oil production in the Permian basin in Texas and New Mexico, build new manufacturing plants and expand operations. He said the initiatives will create "thousands" of jobs and increase energy security.

Exxon has been investing in new refining and chemical-manufacturing projects on the Gulf Coast to expand its manufacturing and export capacity. Most of Exxon Mobil's chemical capacity investment in the Gulf is targeted toward export markets in Asia and elsewhere.

As part of Exxon's investments, the Port Allen aviation lubricants facility, which blends, packs and distributes products worldwide, expanded. The project created 400 construction jobs and 45 new permanent jobs between the Port Allen and Baton Rouge chemical plant sites.

The company also completed a Baton Rouge sulfur expansion project in 2015. Construction on the project, which increased the refinery's processing flexibility and capacity, began in 2014. The project helped to preserve jobs for some 5,500 employees and contractors.