A Year After Storms, Motiva Moves Towards Expansion
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Author: Aramco ExPats
Released 22 September 2006
Reminders of the damage caused by last year’s hurricanes are apparent in the Gulf Coast refinery town of Port Arthur. However, despite the humbling evidence of hurricanes Rita and Katrina -- which last year temporarily shut down 28 percent of the nation's refining capacity and pushed pump prices well past $3 a gallon -- the oil industry is busy expanding along the Gulf Coast.
Refiners expect to boost capacity by 2010 by as much as 1.9 million barrels, about 11 percent of the current rate, with the most significant changes along the Gulf Coast.
The 3,600-acre Motiva refinery in Port Arthur is planning an expansion that the facility's general manager says will double its production by 2010 and make it the largest U.S. refinery.
"You could ask, `Aren't you increasing the risk if you're going to be sticking it in the Gulf Coast area?' During two months out of the year, probably," Todd Monette said. "When you start looking at core infrastructure needed to put a big site like this in place, that's what the Gulf Coast is all about."
Despite such faith, last year's storms did lead to fundamental changes that could delay or put some expansion plans out of reach. The labor pool is lacking. Orders for materials and parts take longer to fill. Competition from other industry or hurricane-related projects put a drag on resources. Each of these factors contributes to increased costs.
Undaunted, Motiva, a Houston-based joint operation between Saudi Refining Inc. and Shell Oil Co., is preparing land parcels while it awaits permits and final approval from parent companies on the $4.5 billion expansion proposal.
The project could start by next year. Motiva has also lined up its contractor and is working with state work force commissions, local economic development authorities and schools to help build a steady labor pool. Projects along the Texas and Louisiana coasts soon will be competing for as many as 20,000 workers, said Rick Strouse, a project manager for Motiva.
"The planning goes beyond the structural expansion because of the size of project and the work force situation," Strouse said. "What we are trying to figure out is how many workers will there be during the peak and what housing projects are there going to be, then ask, does all that fit?"
A successful expansion would take Motiva's Port Arthur refining capacity from 275,000 barrels to 600,000 barrels a day. That would be bigger than the current largest single producer, Exxon Mobil's Baytown facility, now at 557,000 barrels per day capacity.