Marathon Petroleum has decided not to move forward with a previously announced expansion at its Garyville refinery that had been estimated to cost between $2.2 billion and $2.5 billion.
As Reuters reports, the company had said in February that it would defer the final investment decision on the project to convert residual fuel to diesel using hydrogen. The decision to scrap the residual oil upgrader, known as ROUX, comes amid a slump in global crude oil prices.
“While we still believe the ROUX is an excellent project to enhance MPC’s platform, we constantly evaluate market conditions, and at this time we have decided to cancel the project,” Marathon CEO Gary Heminger says in a statement announcing third-quarter results.
Excluding an impairment charge related to the cancellation of the project and other items, Marathon posted a profit of $1.94 per share in the quarter. That beat the average analyst estimate of $1.82 per share, according to Reuters.
When Louisiana Economic Development announced the expansion in April last year, it estimated the expansion would create 65 new direct jobs with an average annual salary of $115,000 per year, plus benefits. LED had also estimated the expansion would result in 304 new indirect jobs. Marathon had estimated development of the project would result in 3,000 new construction jobs. With a 522,000-barrel-per-day capacity, Marathon’s Garyville refinery is the largest in Louisiana and the third-largest in the U.S. Roughly 800 Marathon employees work at the site, as well as 650 contract workers.
