HOUSTON (Dow Jones)
Plans to double the capacity of Motiva Enterprises LLP's Port Arthur, Texas refinery have been delayed by efforts to secure double the crude, said John Hofmeister, President of Royal Dutch Shell PLC's (RDSB.LN) U.S. operations.
"The crude supply supporting this major expansion needs to be thought through," Hofmeister said, speaking on the sidelines of a conference in Houston Wednesday.
The proposed 325,000 barrel-a-day expansion at the 275,000 barrel-a-day refinery was first discussed in mid-2005. Early in the decision-making process, hurricane damage to the Port Arthur refining center just east of Houston delayed a decision, as damage to the plant from Hurricane Rita became the focus, and labor costs in the region skyrocketed.
Although contractors have been hired for several key elements of the project, no final investment decision has been made. "The decision is still under study," Hofmeister said.
Hofmeister stressed the complexity of projecting crude supply and cost issues into the future has been the major hurdle that the project faces. "We have to really work that carefully with our partners, the Saudis," he said.
Motiva is a joint venture between Shell and the Saudi Arabian Oil company. In addition to the Port Arthur refinery, Motiva operates two plants in Louisiana.
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