ExxonMobil Looks to the Future as Domestic Petroleum Refining Merger Frenzy Settles

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). In 1999, Exxon merged with refining giant Mobil Oil to create one of the largest oil and gas companies today. The merger signified the beginning of the "Mega-Merger" trend for the U.S. petroleum refining industry. The "mega-merger" era in the U.S. petroleum refining industry heralded the emergence of several of today's industry leaders including Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas). and ConocoPhillips (NYSE: COP) (Houston, Texas). Today, ExxonMobil Corporation (NYSE: XOM) (Irving, Texas) is the third largest petroleum refiner in the U.S. behind Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas). and ConocoPhillips (NYSE: COP) (Houston, Texas).

Here's a brief overview of the ExxonMobil merger. In 1999, Exxon and Mobil Oil completed merger plans. As a result, Mobil Oil's four refineries with a total capacity of 980,000 barrels per day were combined with Exxon's four refineries to create over two million barrels per day processing capability. At that time, Exxon Mobil Oil refineries include former Mobil Oil refineries at Torrance, California (Plant 1007985), Joliet, Illinois (Plant 1013558), a 50/50 joint venture with PDVSA in Chalmette, Louisiana (Plant 1013117), and Beaumont, Texas (Plant 1012964), plus original Exxon refineries in Benicia, California; Baton Rouge, Louisiana (Plant 1004076); Baytown, Texas (Plant 1001169) and Billings, Montana (Plant 1017024). In May of 2000, Exxon Mobil sells its Benicia, California refinery to Valero Energy as part of the Federal Trade Commission (FTC) merger approval agreement.

Today, Exxon Mobil's total refining assets include seven refineries with a combined capacity of 1.978 million barrels per day.

As these mergers took shape, new corporate protocol changed capital spending cultures for some. For example, prior to the Exxon-Mobil merger, Mobil Oil's management aggressively pursued capital expenditures by taking on higher risk projects. Now with Exxon's management philosophy in place, capital expenditures continue, but with a more conservative approach. During the acquisition period the company cancelled or delayed several major refinery projects. The company canceled a $750 million refinery expansion at Beaumont Texas refinery due to Exxon and Mobil merge announcement and also put a $25 million coker upgrade on hold due to Exxon and Mobil merger agreement.

Currently, the company is reviewing several large future capital outlays such as a major delayed coker unit upgrade (PEC 01008946) and recently began construction of a $300 Million cogeneration plant (PEC 01006776) at its Beaumont refinery. For details see archived September 22, 2003 IIR Industry Alert: ExxonMobil Beaumont Refinery $300 Million Cogeneration Expansion Underway.

The company has also scheduled a major $40 million refinery turnaround (PEC 02005112) at one of its gulf coast refineries during the first quarter of 2004. The turnaround will provide necessary maintenance to the refinery's 23,000 barrel per day HCLA Hydrocracker, 35,000 barrels per day each PHLA Reformers 1 & 2, Naphtha Hydrotreaters 1 & 2 (80,000 Barrels per day combined) plus associated downstream units.