Industry leaders expect U.S. Gulf Coast crude exports to remain high in the coming years, maintaining that global prices should stay strong enough to justify movement offshore as infrastructure improves, demand increases, and global inventories eventually fall.


Much of the oil industry’s attention in 2022 was appropriately focused on a shortfall in global refining capacity that was borne out by some of the largest refining profits in modern history.

But with the start of the new year, some new refinery capacity is much closer to entering service. That makes it more likely that facilities far from the continental U.S. will have a sizable impact on global markets, particularly if consuming countries flirt with or slip into recession.

Many refinery projects originally expected to come online in 2021 or 2022 were delayed into 2023 and a few of the more ambitious projects may have to wait for 2024 or 2025. In short, products’ and crude traders need to keep close track of the upcoming changes to world crude runs and downstream conversion capacity that may significantly impact returns for both new and existing refineries.

OPIS, together with the refinery consultants at Turner Mason, took a look at expected global refining additions and subtractions. Some of the names may be familiar and others may soon move into the lexicon of trader vocabulary, replacing facilities such as St. Croix that no longer appear relevant.

Turner Mason’s John Mayes pointed to a new sense of urgency for some of the expansion projects, saying the huge margins created by Russia’s invasion of Ukraine have hastened the need for more barrels.

In less than a month, the European Union will begin to enforce an embargo on Russian refined products. Many of the managers of new refinery equipment are motivated to take advantage of record returns before that happens.

The U.S. is home to only one real 2023 “mega-project,” but it may impact gasoline, diesel and jet fuel later in the first quarter of 2023.

ExxonMobil Corp. will expand the capacity of its Beaumont, Texas, refinery by 250,000 from its current nameplate of 384,000 b/d.

The project is part of the company’s “Growing the Gulf” plan and is designed to find a home for Permian Basin crude produced by the major. When completed, the refinery will be the largest single refining complex in the country.

The Beaumont facility weathered a cold snap on Christmas weekend and reports indicate that it is currently running at around 235,000 b/d, during the expansion work, which is expected to be finished by April. At some point in the second quarter, it will be processing about 534,000 b/d of crude and feedstock.

In addition to that project, the first quarter is expected to see the restart of the rebuilt 50,000 b/d Superior, Wis., refinery that has been offline since an early 2018 explosion and fire. Most industry sources expect the plant will resume production sometime in March.

Some smaller tweaks are also in the works for other U.S. refiners. Valero Energy Corp. is adding 102,000 b/d of crude processing capacity at its Port Arthur, Texas, refinery and the work will include a 55,000 b/d increase in coking capacity.

In the minus column, the largest subtraction will come when Lyondell’s Houston Refinery complex closes at the end of 2023. The 268,000 b/d plant is destined for repurposing and sources believe efforts to its production will have little chance of success, given that a new owner would need to make more than $1.5 billion in required upgrades.

Phillips 66 Co.’s twin facilities in the East Bay region of California will be taken out of the mix soon this year. The company is well underway with its “Rodeo Renewed” project to convert the San Francisco area complex into a renewable fuels’ facility.

The company will stop running crude and instead use waste oils, fats, greases and vegetable oils to make more than 50,000 b/d of renewable diesel, renewable gasoline and sustainable aviation fuel.

And the company’s Santa Maria facility in San Luis Obispo County, which now processes crude and makes intermediates for Rodeo, will be decommissioned.


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