Saudi Arabia’s oil company, Saudi ARAMCO, is a pretty smart investor, it seems. Not only does it make a profit from the oil it produces, but it will also make a profit on oil – no matter its source – that is refined in its half-owned refinery in Port Arthur, Texas.

Within a Month, Which Refinery Will Be the Largest in the US?
Eagle Ford Shale Project, Seaway reversal, and other factors favor expansion of Saudi-Shell’s Port Arthur refinery in Texas
Ashim Midha

While US Northeast refineries such as ConocoPhillips’ (COP) Trainer as well as Sunoco’s (SUN) Girard Point and Marcus Hook are on the verge of shutting down if a buyer is not found, the historic Port Arthur refinery near Sabine Lake in East Texas is about to complete a massive expansion.

Continually improving exploration and production technology will allow for significantly greater oil recovery from the Eagle Ford shale and Permian Basin in Texas – aggregate flow from these regions is expected to multiply several times over within the next few years. Increased flow from the Bakken Shale in North Dakota and Athabasca Oil Sands near Alberta, along with the reversal of Enbridge (ENB) and Enterprise Products Partners’ (EPD) Seaway Pipeline, will also add to the vast quantity of oil moving toward Gulf Coast refineries such as Port Arthur.

After the Port Arthur project is completed within the next month, the 110-year-old facility’s throughput capacity is expected to more than double to 600,000 barrels per day (“bpd”). It will rank as the largest in the United States (measured by operable capacity) and among the top 10 in the world. Following expansion, it will surpass the largest US refinery, ExxonMobil’s (XOM) Baytown, by approximately 40,000 barrels. The Port Arthur refinery currently handles 285,000 bpd and is the 15th largest in the country. For the sake of scale, the world’s largest is Reliance Industry’s 1.24 million bpd facility located in Jamnagar, Gujarat, India.

The operation is owned by Motiva Enterprises, a joint venture of Saudi Refining, Inc. and Shell (RDS.A). Each entity owns a 50% share of the JV. Saudi Refining is a subsidiary of the Saudi Arabian national oil company, Saudi Aramco.

April:23:2012 - 09:29 | Comments & Trackbacks (2) | Permalink
2 Responses to “Saudis Profit on US Refining”
  1. 1
    Solomon2 Said:
    April:23:2012 - 11:25 

    Wow, the Port Arthur facility dates all the way back to the days of Spindletop, the first big Texas gusher.

    I note that U.S. exports of unleaded gasoline have been increasing rapidly the past year or two. These exports, not the price of crude, seem to be responsible for higher prices at American gas pumps. What I didn’t realize is that Aramco had such a large influence on this market, effectively giving the Sauds another tap to control U.S. fuel prices.

  2. 2
    John Burgess Said:
    April:23:2012 - 11:41 

    @Solomon2: Well, the Saudis don’t have a majority interest, so they cannot act unilaterally. But it certainly does diversify their economy.

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