CEO of proposed Permian refinery explains decision to build
We checked in with Jack Hanks, CEO of MMEX Resources Corp., to learn more about his team’s plan to build a 50,000 barrel per day refinery near Fort Stockton, Texas, in the heart of the Permian Basin—North America’s most active shale play.
What are the main reasons why such a refinery makes sense in the Permian?
The Permian Basin was recently named by the U.S. Geological Survey as the largest "continuous oilfield” in the United States, and production volume is growing every day. However, there is a very limited number of refineries and pipeline systems in the Permian Basin to support this production growth. As of right now, there are only three refineries in the area with a total 300,000 BPD capacity. Furthermore, the existing pipeline systems do not allow for oil and gas exports—principal oil and products pipelines go to the Gulf Coast or to Cushing, Oklahoma. Initial discussions with crude oil suppliers in the Permian Basin indicate that dedication of 50,000 bpd including construction of pipelines or gathering and delivery systems to the refinery are not an issue. Plenty of feedstock capacity exists today.
How do oil prices play into the decision to build this refinery?
The recent rise in oil prices and upticks in drilling activity throughout the Permian Basin indicate that the US oil and gas market is beginning to recover from the recent downturn. Combined with the rising demand for petroleum products in Mexico and South America, rising oil prices and Permian production levels make now the right time to pursue this refinery project.
Why will the refinery send product to the places like Mexico and Peru?
There’s a rapidly growing market for exporting refined products and crude oil into Mexico as well as Central and South America. There is a shortage of refined product in western Mexico. Peru alone is currently importing 160,000 BPD of both crude oil and refined products.
In the Bakken, a 19,000 bpd refinery was built a few years ago. This project will be more than double that. Can you talk about why 50,000 bpd is the right capacity?
50,000 BPD capacity allows for a significant volume of crude oil and petroleum products to be moved through the refinery with the amount of feedstock readily available, but allows the MMEX refinery to still be classified as a minor emission source with full approval and permitting within the purview of the Texas Commission On Environmental Quality (TCEQ).
Last one Jack. This certainly seems like an exciting project. What has the reaction of the region and other potential partners/collaborators been?
The reaction to date has been quite positive. MMEX Resources Corp. is receiving multiple inquiries daily from potential industry partners and investors who want to be part of the Pecos County refinery project.