MMEX Resources begins construction of crude distillation unit at Fort Stockton

MMEX Resources has taken a major step toward realizing its Pecos County Refinery project, launching construction of its Phase I crude distillation unit in Fort Stockton this past week.

“We’ve accomplished a great deal” since announcing the project back in March, Jack Hanks, MMEX chief executive officer told the Reporter-Telegram by telephone.

“We bought the land, we got the permits, obtained an easement from University Lands, we’ve graded the road to the hardtop,” he recounted.

Approximately 150 attended the groundbreaking ceremonies for the unit, including investors from as far away as Florida and Maryland, Hanks said.

The distillation unit, when complete by the end of 2018, will generate 10,000 barrels a day of mid-range diesel that will be used for non-transportation purposes such as in hydraulic fracturing fluids, naptha and residual fuel oils.

While the distillation unit could be seen as a foot in the door to the larger refinery project, Hanks stressed that the two are separate projects requiring separate application processes.

He expects to start the application process for the refinery in the first quarter of 2018, a process he calls much more complicated than the application for the distillation unit. The refinery will offer a full slate of fuels, from gasoline to diesel, jet fuels to some propane.

When MMEX announced plans for the refinery this past March, it was for a 50,000-barrel-a-day facility. But that has been doubled to 100,000 barrels a day, Hanks said.

“We found that, for a little more incremental cost, we could double the size,” he explained. The larger refinery will mean more jobs and a larger tax base for Fort Stockton, he pointed out.

“I still think it will be 400-plus technical and construction jobs at the peak. It’s hard to estimate but I know what happens is this will accelerate other jobs, from transportation to catering to housing. So it will be far above 400 jobs,” Hanks said. “And with a large-scale refinery, it’s a sizable tax base for Pecos County. This is a $1 billion investment.”

There is plenty of crude supply from the Permian Basin, “and the market seems to be there,” he said.

While construction of the distillation unit is underway, he expects a 12 to 15-month process to receive permits for the refinery and another 12 to 15 months for construction, putting completion around 2020. “We’re looking at a three-year window,” Hanks said.

Both facilities are designed to be accessible by rail and truck and eventually pipeline. The site for both facilities connects to roads that lead to Interstate 10 and Interstate 20 and they are right on the Texas Pacifico railroad, which leads to interconnections at Dallas-Fort Worth and the Gulf Coast.

There is also the potential for exports of the refinery’s products to Mexico, Hanks said, because Texas Pacifico connects with FerroMex at Presidio, giving access to markets in western Mexico.