U.S. Sen. Kay Bailey Hutchison (R-TX), third from left, was joined by other state and local elected officials in Port Arthur on Aug. 13 for the groundbreaking of Valero's $2.4 billion expansion project.

As U.S. gas prices continue to climb, the American petrochemical industry is taking steps to increase the nation's refining capacity.

On Aug. 13, national and local leaders were in Port Arthur to break ground for $2.4 billion expansion at the Valero Energy Corp. refinery.

In terms of investment, the Port Arthur crude oil expansion project is not only the largest at the Southeast Texas facility, but the biggest project Valero has ever undertaken.

The expansion will involve construction of a 50,000 barrel per day hydrocracker, making it one of the country's largest refineries. The project will give Valero more capacity to process heavy, sour feedstock, the company said.

"The project will significantly expand the capacity of the Port Arthur Refinery to meet the transportation fuel needs of the individuals of Jefferson County and the United States," a press release from the company stated. "The Port Arthur expansion project emphasizes ultra low sulfur diesel production – reflecting the significant projected growth in demand for diesel in the U.S."

Among dignitaries on hand for the groundbreaking were U.S. Sen. Kay Bailey Hutchison, R-Texas, Jefferson County Judge Ron Walker, Texas Railroad Commissioner Elizabeth Ames Jones, Port Arthur Mayor Deloris Prince and State Reps. Alan Ritter, Joe Deshotel and Mike Hamilton.

In addition to increasing production, the project will also help the Southeast Texas economy. The company said the expansion will require a peak construction workforce of 2,000 people and will create more than 30 permanent jobs.

After the expansion goes online in 2011, the refinery's daily production capacity will grow from 325,000 barrels to 415,500 barrels, company officials said.

The Valero project is only one of the major expansions underway at area refineries. Motiva Enterprises is essentially building a new refinery inside its existing facility – the first ground-up refinery construction in the United States in 30 years.

Motiva is investing close to $5 billion in the expansion, which will bring its daily capacity up to 600,000 bpd.

Total Petrochemicals is also investing in a $1.8 billion project to bring its capacity from 240,000 to 290,000 barrels.

The projects and the accompanying workforce are keeping Southeast Texas from experiencing the economic downturn being felt in the rest of the country, area leaders say.

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