Exxon Mobil Corporation (NYSE:XOM) is embarking on a substantial $1-billion expansion initiative for diesel production at its Fawley oil refinery, located near Southampton, Hampshire, on England’s south coast. As the largest and oldest among the six operational refinery sites in the UK, the Fawley facility currently processes 270,000 barrels of crude per day.

The expansion project includes the integration of a new hydrogen plant into Britain’s largest oil-processing complex, situated at the Fawley refinery. This strategic move is anticipated to pave the way for the development of sustainable aviation fuel, with the hydrogen plant designed to operate on natural gas.

Expected to augment low-sulfur diesel production by 40%, the project, known as the Fast project, is slated for full production by 2025. This coincides with the planned cessation of low-sulfur diesel production at the Grangemouth refinery in Scotland.

ExxonMobil’s efforts on the Fawley diesel facility had experienced a temporary pause due to the decline in fuel demand caused by the Covid-19 pandemic. The current geopolitical scenario, with Russia sanctions impacting the region’s major external supplier, has led to diesel profits in Europe exceeding historical averages.

While UK diesel demand has not fully rebounded to pre-pandemic levels, the country relies on imports for approximately half of its consumption. The Fawley project has the potential to reduce imports by up to a quarter, contributing to the nation’s energy independence.

The expanded facility is anticipated to commence production in 2024. ExxonMobil had initially projected a nearly 45% increase, equivalent to 38,000 barrels per day, in ultra-low sulfur diesel production when it made the final investment decision in 2019.

In a recent development, XOM secured funding from the UK government to explore sustainable aviation fuel production at the Fawley site. If the project advances, it could address 20% of the UK’s sustainable aviation fuel requirements by 2030.

The hydrogen plant at Fawley is expected to be part of the Solent cluster, a collaborative effort among companies focused on decarbonizing the industry. ExxonMobil’s substantial investment aims to reduce Britain’s dependence on imported fuel and mitigate emissions associated with global transport.

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