Houston ship channel location “could make a lot of sense”

From the Houston Chronicle

Chevron said Wednesday it’s interested in either buying or building an oil refinery in the Houston area to process its booming production from West Texas’ Permian Basin.

Chevron is the nation’s second-largest energy company, but it doesn’t have any Texas refineries. Outside of the West Coast, California-based Chevron only has its Pascagoula refinery in Mississippi.

Spokesman Braden Reddall said a strong refining portfolio is a critical focus for the company.

“An expansion of our Gulf Coast presence could be considered if the right opportunity presents itself at the right price,” Reddall said.

As first reported by Reuters, Chevron’s head of downstream and chemicals, Pierre Breber, said at an energy conference in London that the company is highly interested in gaining a strong oil refining presence along the Houston Ship Channel to take advantage of the company’s increasing presence in the Permian.

“Something on the ship channel side could make a lot of sense for our company,” Reuters reported Breber as saying.

There’s a slew of new pipelines under construction to carry Permian crude to refining and export hubs near Houston and Corpus Christi.

The Houston area is the nation’s largest refining hub. If Chevron decides to buy in Houston, both LyondellBasell’s Houston refinery and Petrobras’ Pasadena refinery have been considered for sale in recent years, although Chevron could consider other possibilities. Building new refineries from scratch if rare because domestic fuel demand is relatively flat. Instead companies have opted to acquire or expand.

Chevron does already have a major petrochemical footprint in the Houston area through its joint venture with Phillips 66 called Chevron Phillips Chemical, especially in Baytown, Pasadena and Sweeny.

Chevron’s refineries are mostly configured to process heavier oils from countries like Canada and Venezuela. But more companies, including rival Exxon Mobil, are investing in processing more of the lighter crude from the Permian. Exxon Mobil is eyeing a major expansion to do just that at its Beaumont refinery.

Both of Chevron’s and Exxon Mobil’s new chief executives have strong refining backgrounds and are keen to invest in Gulf Coast refining.


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