Exxon Mobil will complete a $1 billion expansion of diesel production at its Fawley UK oil refinery next year, a key step in curbing the country’s reliance on imports.

The oil major also announced plans to add a new hydrogen plant at Britain’s biggest oil-processing complex, potentially paving the way for the production of sustainable aviation fuel. That unit will run on natural gas, Exxon said.

Exxon (NYSE:XOM) has been working for years on the Fawley diesel facility, which was put on hold when the Covid pandemic prompted a collapse in fuel demand and refining margins. That’s since reversed in Europe, with the profit from turning crude oil into diesel holding above historical averages after sanctions on Russia deprived the region of its biggest external supplier.

The refinery on England’s south coast will boost output of low-sulfur diesel by 40%, the company said in a statement. The project, dubbed Fast, will reach full production in 2025, when the Grangemouth refinery in Scotland is scheduled to stop making the fuel.

While UK diesel demand has struggled to return to pre-pandemic levels, the nation relies on imports for up to about half of its consumption. The Fawley project could help to cut imports by as much as a quarter, according to Exxon.

First production from the expansion will be available in 2024. Exxon had forecast an increase of almost 45%, or 38,000 barrels a day, in ultra-low sulfur diesel output, when it took the final investment decision in 2019.

The hydrogen plant at Fawley would be part of what’s known as the Solent cluster, which brings together companies looking at decarbonizing industry.

Exxon Mobil was awarded funding from the UK government earlier this month to look at the production of sustainable aviation fuel at Fawley, which is linked to London’s Heathrow airport by pipeline.

If the project proceeds, it could provide the UK with 20% of its SAF needs by 2030, according to a statement at the time.

Energy Voice, December 1, 2023