U.S. Oil Boom Prompts Motiva to Change Port Arthur Strategy
Motiva Enterprises LLC had to adjust its strategy for the $10 billion expansion of the Port Arthur, Texas, refinery because of a boom in U.S. oil production, Bob Pease, the company’s chief executive officer, said.
Pease, Saudi Arabian Oil Co. CEO Khalid Al-Falih and Royal Dutch Shell Plc (RDSA) CEO Peter Voser were all in Port Arthur today to show off the expanded plant, which more than doubled capacity to 600,000 barrels a day.
When the company started the project in 2007, U.S. fuel demand was increasing while production was decreasing. An economic downturn and increased production from U.S. shale fields reversed those trends.
Pease said the expanded plant can run a wide range of crudes so that it can use whatever oil can be processed most profitably. The expansion included a 75,000-barrel-a-day hydrocracker that can quickly shift from making gasoline to diesel, depending on which fuel is most valuable at the moment.
“The world has changed dramatically in five years, but we built the right plant for it,” he said.
Early testing indicates that the plant will probably be able to run above its capacity of 600,000 barrels a day, Pease said. Motiva would need a new permit from the state to expand output, he said.
Motiva is a refining and marketing joint venture of units of Shell and Saudi Arabian Oil Co., also known as Saudi Aramco.
Formed in 1998, Motiva has two refineries in south Louisiana in addition to the Port Arthur plant. The three refineries now have a combined capacity of 1.1 million barrels a day, according to data compiled by Bloomberg.
There will probably be synergies among the three facilities, Pease said. Port Arthur won’t be able to produce all the heavy residual oil it needs to run its coker at full capacity, he said. The Convent, Louisiana, refinery doesn’t have a coker, so it could send leftover residual fuel oil to Port Arthur to be converted into more valuable lighter products.
The Port Arthur refinery has available land for further expansion, Pease said.
“There’s room for it,” he said. “It’s not in our immediate plans, but I don’t think our owners would rule out anything.”
Pease spent his early career in various technical refinery positions. He moved on to leadership roles and was president of Shell Trading Co. before becoming Houston-based Motiva’s chief executive in November 2008.
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