Marathon Petroleum Corp. has long intended for its Galveston Bay Refinery to become the largest in the nation and its announcement of an additional $1.2 billion investment is the next step in that long-term goal, Mayor Matt Doyle said Thursday.
“It’s a great deal for the city of Texas City, there’s no doubt about that,” Doyle said. “Anytime one of our facilities is expanding, the better off we are.”
Officials with the Ohio-based company on Thursday unveiled plans to invest an additional $1.2 billion into the Texas City facility between 2019 and 2022 as part of a plan to increase its crude capacity and drive down costs.
The company has been working to integrate its Galveston Bay facility, which it purchased from BP in 2013 for $2.5 billion, and the Texas City refinery it had already operated.
The Ohio company is investing the money into its Galveston Bay Refinery as part of a program called the South Texas Asset Repositioning, or STAR, program. Once the project is complete, it will increase the facility’s crude unit capacity by about 40,000 barrels per day and provide more than $525 million in earnings before interest, tax, depreciation and amortization, according to the company.
The refinery’s current capacity is about 585,000 barrels per day, said Sid Barth, spokeswoman for the company.
Texas City industries provide thousands of high-paying jobs and city and business leaders said such an investment was a boon to the city’s economy. Local leaders on Thursday greeted the news with optimism.
“That is the kind of investment that shows the deep roots, commitment and stability that Marathon Petroleum exhibits as Texas City’s largest employer,” said Jenny Senter, president of the Texas City-La Marque Chamber of Commerce. “Our confidence is 100 percent behind their growth and ability to grow the local economy through this venture as well as the many ancillary businesses that grow as Marathon grows.”
Infrastructure investment would broaden the tax base, said Brad Boney, a member of the Board of Pilot Commissioners for Galveston County.
“That will bring more property taxes to our tax base and decrease the burden on homeowners, and provide jobs,” Boney said.
Officials with the Galveston-Texas City Pilots Association, a group of 16 pilots the board oversees, also were encouraged by the announcement.
“The Galveston-Texas City Pilots are committed to the economic welfare of Galveston County and any projects that contribute to the county are welcome in our eyes,” said James Andrews, the director of operations for the association.
The investment also will allow the facility to achieve an updated Tier 3 gasoline sulfur rating from the U.S. Environmental Protection Agency, officials said.
Sulfur is a natural component in crude oil that is present in gasoline and diesel unless removed. Sulfur in gasoline impairs the effectiveness of emission control systems and contributes to air pollution, according to the Environmental Protection Agency. Reducing the sulfur content in gasoline enables advanced emission controls and reduces air pollution.
In January, 2017, the U.S. Environmental Protection Agency began requiring all U.S. gasoline to meet an annual 10 parts per million average sulfur requirement as part of its new Tier 3 vehicle and fuel regulations. The Tier 3 program is part of a comprehensive approach to reducing the effects of motor vehicles on air quality and public health, according to the EPA. The program considers the vehicle and its fuel as an integrated system, setting new vehicle emissions standards and a new gasoline sulfur standard.
A division of the company selected Irving-based Fluor Corp. in 2018 to perform the engineering and procurement scope on the project, officials said.
“This project will continue the development of Marathon’s Galveston Bay refinery into a world-class refining complex,” said Mark Fields, president of Flour’s Energy & Chemicals business in the Americas.
The Galveston Bay Refinery is the second-largest refinery in the United States and employs about 1,960 people, according to the company’s website.
Motiva Enterprises’ Port Arthur Refinery, which has a capacity of about 636,500 barrels per day, is the country’s largest refinery, taking the title in 2012 after a $10 billion, 7-year expansion, according to a Reuters report.
“It’s good that they’re continuing to move forward,” Doyle said. “The great part is that while people are always talking about doing things, Marathon has now committed to doing it — they’ve stayed true to the plan.”
Texas City is uniquely positioned with its port, workforce and location to accommodate a facility like the Galveston Bay Refinery, Doyle said.