Texas Refineries Re-evaluating Expansion Plans

Even highly publicized and anticipated expansions at Port Arthur-area oil refineries cannot escape the country's poor economic climate, with contractors on the $7 billion Motiva Enterprises expansion laying off workers as the oil refiner re-evaluates the project. Valero Energy Corp. scrapped plans for an $800 million additional coker and delayed a $1.6 billion hydrocracker installation.

Courtesy of Motiva.

"Margins are down, and with the economy overall, demand for products is down," says Motiva spokesperson Verna Rutherford. "As a company, we are ensuring tighter control."

Motiva of Houston will conduct a complete analysis of the expansion, including cost and scheduling of what it had anticipated would become the largest refinery in the United States.

 "The whole project is being reviewed to see what is in our best interest and to make adjustments," Rutherford says. "Everything is on the table during the review. Until it is complete, we don't know how it will more forward."

The expansion project was to add 325,000 barrels per day capacity to nearly double Motiva's capabilities and be complete in 2010. That date may be pushed back, depending on the review, Rutherford says.

In the meantime, work on strategically focused elements continues at the site. Rutherford indicates that includes engineering and civil work for platforms on which to place large modules, vessels and other equipment fabricated offsite that have already arrived or will within the next couple of months. She estimates 2,500 contract workers are still on the job, but she could not estimate the number before the layoffs.

Project manager Bechtel/Jacobs Joint Venture, a partnership between Bechtel Corp., which has an office in Houston, and Jacobs of Pasadena, Calif., could not provide any additional information. In February 2008, the team estimated between 1,100 and 1,200 people were working site and hiring 800 per month. Activity was expected to peak in early 2009 at more than 6,000.

"There is anxiety about the layoffs, but we're not down to low numbers. There are still a significant number of people working on the project," says Rutherford, "We will continue to have the numbers appropriate to the level of construction activities."

Valero Energy of San Antonio announced the $2.4 billion expansion of its Port Arthur facility in February 2008, but has now scaled back, eliminating a 45,000 barrel-per-day coker and delaying for one year a 50,000 barrel-per-day hydrocracker, says Bill Day, spokesman for Valero. Some site preparation has begun.

Reasons for the changes, says Day, include "the economic downtown and our desire to strengthen our balance sheet and decrease capital expenses."

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