![]() “Having a high-quality refining asset with flexibility will be very important.”Įxxon’s refining and chemicals footprint is at least double that of its Big Oil competitors, potentially making it more vulnerable to a speedy energy transition, and especially the growth of electric vehicles. “You just have more variables now due to the energy transition,” said Jay Saunders, a natural resources fund managers at Jennison Associates, which has $186 billion under management. To give an example, an Exxon refinery in Singapore used to produce fuel oil that sold for $10 per barrel below the price of Brent crude, but after a recent upgrade, the facility produces lubricant base stocks that sell for $50 above Brent.Įxxon has upgraded and added to its refineries at Fawley in the UK and Beaumont in Texas to produce more diesel, which is used for heavy-duty transportation and is less vulnerable to competition from electric vehicles. Read More: Exxon Eyes $10 Billion Earnings Lift in Fuels, Chemicals by 2027Įxxon wants to take a more nuanced approach by upgrading facilities to switch in and out of products depending on demand. Some European plants shut down during the pandemic, while others in the US switched to biodiesel. But with traditional fuels such as gasoline under threat from EVs, refineries worldwide are being forced to adapt quickly. Refining allows Exxon to earn money right along the fossil fuel supply chain, from the wellhead to the gas tank. Rockefeller’s Standard Oil, which was established in the 19th century. “We’ve got projects that we know we would do to take those steps.”Įxxon gets most of its earnings from oil and natural gas production but refining has always been in its corporate DNA, right back to its original incarnation as part of John D. “We’re planning on modifying some of that yield from gasoline to distillate and chemicals feed,” Jack Williams, Exxon senior vice president, said Wednesday at the company’s office in Spring, Texas. The goal is to produce more chemicals, found in everything from paint to plastic, for which there are few low-carbon alternatives. Over time, it’s open to cutting output of gasoline, the focus of the company’s refining business since Henry Ford introduced the Model T nearly 100 years ago. The strategy, discussed by this week by executives at a presentation to investors and media, shows how even Exxon, one of the leading proponents of fossil fuels, is being forced to reckon with a future in which electric vehicles significantly eat into gasoline consumption.Įxxon has already reduced production of fuel oil and high-sulfur petroleum at refineries in Singapore and the UK.
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