Texas company to export gasoline refined from shale oil to Mexico

Bloomberg:
The newest oil refineries in Texas are looking to join the hottest two plays in the North American oil industry.

Raven Petroleum LLC and MMEX Resources Inc. are building refineries in the Eagle Ford and Permian Basin that will process ample local supplies of light crude into gasoline and diesel. The fuel will be shipped on existing rail lines across the border to Mexico, where the government has opened the market to foreign competition, attracting companies including BP Plc and Glencore Plc.

U.S. shale drillers have doubled the number of rigs seeking oil since May, with most of the gains seen in Texas. Production nationwide is expected to approach the all-time high from 1970. At the same time, Mexico’s gasoline demand is outpacing local supply, forcing the nation to increase imports, which government data show grew 3 percent year-on-year in 2016.

"It looks like they are a set of entrepreneurs that see opportunities in the refined fuels markets in Mexico as it’s getting deregulated and denationalized," Neil Earnest, president of industry consultants Muse Stancil, said by phone from Dallas. "If you are sitting in Texas, you are sitting on low cost crude oil."

The Woodlands, Texas-based Raven’s proposed 50,000-barrel-a-day refinery, about 70 miles from the border in Duval County, will produce gasoline and low-sulfur diesel starting by early 2019, Christopher Moore, the company’s managing director, said in a phone interview this week. MMEX Resources plans to build a similar-sized refinery in West Texas.

The refinery’s location about 50 miles east of Laredo is close to its feedstock supply from the Eagle Ford shale, as well as to the market for its products in Mexico, he said.
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This is a gamble on the Mexicans deregulating their energy sector.  It is likely to be a win-win deal under existing trade policies.  Whether it would be harmed by a border tax is another issue.

I have argued for some time that the US needs to build refineries that can process the huge deposits of shale oil being produced.   This is at least a start in that direction.

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