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The largest US oil company has been generating strong refining profits this year in part on a massive expansion of refining capacity and focus on higher margin chemicals. Executives forecast petrol demand will not peak until late this decade, a much longer timeframe than other forecasters.
“Toward the end of this decade we see petrol demand peaking, but it will be a long plateau,” ExxonMobil senior vice-president Jack Williams said at briefing at its Spring, Texas, headquarters.
ExxonMobil combined its once separate chemicals and oil refining businesses and redesigned operations to quickly shift between fuels and chemicals based on which delivers the highest profit.
Its fuels outlook differs from oil-consuming nations group International Energy Agency, which expects the use of oil for transportation fuels to decline after 2026. US petrol use likely topped out in 2018, the US government has said.
Exxon’s merged refining, petrochemicals and low-carbon business unit will ride market demand for each, said Karen McKee, president of the Product Solutions unit.
“We have the hypothesis this could be a game changer for ExxonMobil,” McKee said.
Exxon’s (bpd) Beaumont, Texas, refinery expanded by 250,000 barrels per day (bpd) in January. The now-619,024 bpd facility processes crude from ExxonMobil’s West Texas oilfields to primarily make diesel fuel.
“It is running extremely well,” McKee said.
As demand for fuel wanes, the refineries will be able to supply new markets without another refining expansion, Williams said.
“We’re going to be upgrading units rather growing our throughput,” he said.
The company’s 564,440 barrel-per-day (bpd) Baytown, Texas refinery, which is co-located with a chemical unit, will allow it to evolve from primarily making fuels to chemicals, Williams said.
“Refining’s not going to go away. (But) a lot of it will be toward chemicals,” he added. REUTERS
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