Royal Dutch Shell plans to expand Texas refinery

The project is the biggest
refinery expansion in 30 years.

DALLAS (AP) — Royal Dutch Shell PLC plans to nearly double the size of an oil refinery it operates with a Saudi partner in Port Arthur on the Texas Gulf Coast, making it the biggest in the nation and one of the largest in the world.

Shell, one of the world’s largest oil companies, said Friday its decision to expand the refinery will increase U.S. supplies of gasoline, diesel and jet fuel.

Shell plans to boost the Port Arthur refinery’s capacity to 600,000 barrels of crude oil per day by 2010 from the current 275,000 barrels per day.

Shell estimated that the expansion, the biggest in more than 30 years, would cost about $7 billion.

A subsidiary

The Anglo-Dutch company operates the refinery with Saudi Refining Inc., a subsidiary of Saudi national oil company Saudi Aramco, in a venture called Motiva Enterprises LLC.

Major oil companies have canceled plans to build new refineries or greatly expand current ones for many years because of environmental opposition and because the profit margins on refining crude oil were too thin.

The Shell-Saudi expansion will occur at an existing plant, however, making it easier to obtain the necessary permits. Workers have already begun sinking pilings into the soil where major units will be built.

And refining margins have rebounded since 2002. Shell is betting that they will remain strong along with high prices for crude oil, analysts said.