Exxon Mobil Corp is considering scaling up plans for a multibillion-dollar expansion of its Beaumont, Texas, oil refinery to make it one of the largest in the world, according to sources familiar with the plans.

Since at least last summer, Exxon has been quietly contemplating a major project to expand Beaumont in what would be the biggest U.S. refinery investment since the shale revolution, which has transformed the country into a growing producer and handed refiners a profit windfall of cheap crude.

Initially the company was considering doubling the current 344,600-barrel-per-day (bpd) capacity by 2020, Reuters reported last year. Now it may go as high as 850,000 bpd by the end of the decade, according to the sources, a figure that would make it the largest U.S. plant and fourth-largest in the world.

The latest details of the expansion plan, on which it has not made a final decision, emerged from Exxon's campaign for a longer-than-usual term for the contract with the United Steelworkers union (USW) local chapter at the refinery.

Exxon has offered a minimum six-year contract consisting of the current four-year agreement negotiated earlier this month by the national union and U.S. refiners, plus two more years, according to the company. The USW has countered with a proposal that would assure no work stoppages during the current national agreement and in the next national agreement, which is expected to be three to four years in length.

An Exxon spokesman declined to discuss a possible expansion of the Beaumont refinery.

"Exxon Mobil regularly evaluates its global portfolio of businesses and opportunities for growth, depending upon the fit with its strategic business objectives," said Exxon spokesman Lee Dula.

SOUR CRUDE FOCUS

The Beaumont refinery was once a major importer of light or medium sour crudes from countries such as Saudi Arabia and Mexico, according to U.S. government data, but has replaced much of that oil with domestic shale in recent years.

The expansion would be done with the addition of a third crude distillation unit, probably configured to run sour crude oil, the sources said. The refinery currently has a 240,000 bpd CDU that refines sour crude, which has a higher sulfur content and is usually lower in cost. The refinery’s smallest CDU has a daily intake capacity of 110,000 bpd in sweet crude oil.

Exxon would also like to reconfigure the smallest CDU to run sour crude oil, the sources said. CDUs perform the initial refining of crude oil coming into a refinery and producing feedstocks for all other production units.

At 850,000 bpd, a bigger Beaumont would dwarf what is now the largest U.S. refinery, Motiva Enterprises' [MOTIV.UL] 600,250 bpd Port Arthur, Texas, plant, located 17 miles (27 km) to the southeast. But it would still be smaller than the biggest plants in South Korea and India, each over 1 million bpd.

The energy supermajor’s two largest U.S. refineries, the 560,500 bpd plant in Baytown, Texas, and the 502,500 bpd facility in Baton Rouge, Louisiana, also have expiration dates out of sync, often referred to as "off pattern," with the expiration date of national agreements negotiated between the USW and U.S. refinery owners.

"The long contract is about the expansion, period," said one of the sources. "Exxon wants all of their largest plants off pattern. They want to expand that refinery by two and a half times."

Source: www.reuters.com

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