In early May, due to the glut in oil and lack of consumption due to COVID-19 and widespread closures, Exxon Mobil posted its first loss in three decades. Spending cuts were also reported by Chevron amid the economic gridlock that occurred in the midst of the first wave of the coronavirus pandemic. Exxon’s reported loss was $610 million, and the company took steps to shutter production of hundreds of thousands of barrels of oil in daily output. In the meantime, Chevron slashed its capital spending twice in a five-week period and worked to also curb supply. What has that meant for the industry in Texas? In its latest move, Exxon Mobil Corp. has chosen to delay the expansion of its Beaumont refinery by no less than a year in an effort to conserve cash flow.
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As the oil behemoth tries to withstand the low demand for its products and works to save cash during the pandemic, the Beaumont refinery project has been pushed to an opening and operable date in 2023. This project will mean the completion of the largest refinery in America. While the world weathers the economic storm, Exxon is “evaluating all appropriate steps to significantly reduce capital and operating expenses in the near term” before making any large growth decisions. When it’s fully operational, the daily oil refining capacity in the Beaumont facility will be approximately 619K barrels per day, which is a 65 percent increase.
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An integral reason for the expansion was to make use of crude from Exxon’s aggressive Permian Basin production ramp-up in West Texas. However, as the Covid-19 pandemic took hold of Texas, the company slashed its capital spending by 30 percent, the largest share of which was in the Permian Basin, thereby reducing any pressing need for increased oil refining capability. According to a report by Forbes, the Exxon Mobil Corp. is poised for a loss of roughly $70 billion in sales revenues for 2020 due to the low oil demand as well as the equally low oil price which reflects it.