Shelling Out for More Refinement

It appears that Netherlands-based Royal Dutch Shell (NYSE: RDS-A  ) (NYSE: RDS-B  ) is about to become more refined. And it has to venture to Port Arthur, Texas, to do so.

Shell and its Saudi Aramco partner, the principals in Motiva Enterprises, which owns a Port Arthur refinery with a current 275,000 barrels-per-day capacity, will spend about $7 billion and three years to expand the facility to a capacity near 600,000 bpd. This will make the facility the U.S.'s largest, besting ExxonMobil's (NYSE: XOM  ) 557,000 bpd Baytown, Texas, unit.

There are currently no meaningful plans to initiate construction of new refineries in the U.S. In fact, I doubt the public would permit it. A constant Not in My Backyard (NIMBY) mentality renders it OK to drill for hydrocarbons or build refineries in someone else's area, but no one wants that activity near their own towns. For that reason, and especially in the face of capacity shortages in the U.S., it'll be interesting to observe how the refinery scene changes, or fails to do so, in the years ahead.

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Fool contributor David Lee Smith doesn't own a single share in any of the companies mentioned. He welcomes your questions or other communications. The Motley Fool has a disclosure policy.