(Reuters) - Exxon Mobil Corp <XOM.N > is weighing a possible multibillion-dollar expansion of its 344,600 barrel-per-day (bpd) Beaumont, Texas, refinery that could make it the nation’s largest by 2020, according to sources familiar with the company’s deliberations.
The deliberations at Exxon are focused on the possible addition of a third crude distillation unit (CDU), the sources said, and its size would determine how much capacity would increase.
Exxon has also made plans to replace four coking unit drums in 2015 and add two new coker drums in 2017 at the Beaumont refinery, the sources said. The drums turn residualcrude oil into petroleum coke, a coal substitute.
An Exxon spokesman, while declining to discuss possible plans for the Beaumont refinery, said the company is always evaluating growth opportunities.
Though many U.S. refiners have been incrementally adding capacity, Exxon's move could be the first major U.S. refinery investment since the sudden rise of shale production opened up a new era of bumper profits for the sector.
The Exxon investment, if made, would bolster the U.S. Gulf Coast's position as a top exporter of fuels to the world at a time when U.S. demand for gasoline and diesel is falling.
Exxon announced plans on July 2 to invest $1 billion to build a delayed coking unit at its 320,000 bpd Antwerp, Belgium, refinery so the plant could refine cheaper high-density, high-sulfur crude oils. That was on top of a previous $1 billion in upgrades to the Antwerp refinery.
"We regularly evaluate our global portfolio of businesses and opportunities for growth, depending upon the fit with its strategic business objectives," Exxon spokesman Todd Spitler said. "We take a disciplined long-term approach to investing, regardless of the economic cycle, and consistently seek new global investment opportunities that create value for shareholders."
Currently, the Beaumont refinery has two CDUs that do the initial refining of crude oilcoming into the refinery and provide feedstock for all other units.
Exxon officials are considering boosting the Beaumont refinery’s size to at least 500,000 bpd, which is close to the capacity of the company’s Baton Rouge, Louisiana, refinery.
The country's biggest refinery is Motiva Enterprises LLC's [MOTIV.UL] 600,250 bpd Port Arthur, Texas, plant.
Exxon is considering making the Beaumont plant even bigger than Motiva's Port Arthur refinery.
"They've talked between 700,000 and 800,000 bpd in total refinery capacity," one of the sources said.
In addition to the Motiva Port Arthur refinery, one other Gulf Coast refinery has undertaken a major capacity expansion since 2009.
Motiva invested $10 billion to expand its Port Arthur refinery from 285,000 bpd. In addition to a 325,000 bpd CDU, the project added multiple units and was completed in 2012.
Marathon Petroleum Corp invested $3.9 billion to boost its Garyville, Louisiana, refinery from 256,000 bpd to 436,000 bpd in 2009. The refinery has optimized performance of its units to increase production to 522,000 bpd.