For nearly two years, the lingering question hanging over the MMEX refinery project in Pecos County has been when will the financing be in place so construction will start.
In a telephone interview with The Pioneer on Friday from Calgary, Canada, company's CEO Jack Hanks said that the financing discussions have accelerated now that “take-off agreements” are in place with buyers to purchase the products produced by the first new refinery to be built in the United States in 40 years.
“I would have to say the truth of the matter has been that without the finalized contracts for our products to be sold, no one wanted to commit on the financing,” Hanks said. “With the EPC (engineering, procurement and construction) contracts in place, the revenue sources secured, we are now just waiting for the financing to be finalized.”
The financing – or lack of it – has resulted in some share holders to take to social media to cast doubts on the legitimacy of the products.
Hanks is aware of the criticism, which also comes via phone calls, emails and letters.
“It's going to happen,” he said. “It has taken more time than we wanted or expected it to take.”
Hanks was in Calgary for meetings regarding the financing.
Hanks said that once the financing is secured, a notice to proceed will be issued, which will start the construction process. Construction will take 12 to 15 months.
The site for the $93 million project is located about 20 miles northeast of Fort Stockton off FM 1053 near the Sulfur Junction spur of the Texas Pacifico railroad. Dirt roads wind the remaining 8 miles to the site.
The initial construction will be for the first refinery. In time, Hanks said the refinery will be exapnded to produce greater quantities and a wider range of products. The first phase is awaiting the financing. The second phase is in the permitting process.
One of the buyers lined up is with Pilot Thomas Logostics for a low-sulphur diesel product used in drilling mud that Pilot will pick up directly from the refinery site.
They also have a deal with a marine supplier for a low-sulphur diesel for ships that meets the IMO 2020 standards of the International Maritime Organization, as well as another deal to sell Naphta, an intermediate product used to make gas or petroleum chemicals.
The online railroad spur will allow shipping across the country, as well as into Mexico.
For Pecos County, the refinery has the potential for a new influx of tax revenue.
According to Pecos County Chief Appraiser Sam Calderon, the county, Buena Vista Independent School District, Middle Pecos Groundwater Conservation District and the Midland College-WRTTC District are taxing entities that stand to benefit from the new revenue stream.
MMEX has also rented additional office space, adding 109 S. Main St. to the original rental next door at 107 S. Main St.
“We will not staff the office full-time until the construction starts,” Hanks said. “There is no need to at this point.”
Since the November 2017 groundbreaking ceremony at the site, the only work that has been done was the grading of the roads along the easements leading into the refinery site.
Hanks said that once the notice to proceed is issued, the first work on site site will be clearing and preparing the surface for construction.
“They just won't see a tower jumping up,” Hanks said. “The parts will be fabricated in Houston and other sites. It can take a few months to build those. All the components will mostly be built in other locations.
“I don't want people to expect that it will all just spring up one day,” he said. “The project will be built from the ground up.
In February, Hanks said that a special purpose vehicle company, Pecos Refining and Transport LLC, was established to operate as a privately held entity for investors. MMEX is the largest equity owner of in the LLC, so a share of the profits from that entity will go to MMEX and its shareholders.
The financing will be 80 percent debt and 20 percent equity.
The key hurdle for the project has been obtained – an air emission permit from the Texas Commission on Environmental Quality (TCEQ). The TCEQ is empowered by the federal Environment Protection Agency to grant such permits in the state.
Saulsbury Industries of Odessa and V-Fuels of Houston. will be the EPC contractors for its planned refinery project.