President Donald Trump Tuesday announced that the U.S. would see its first new refinery constructed in 50 years. The proposed project is an initiative of America First Refining. According to the company’s press release, the facility would have the capacity to process approximately 164,000 barrels of oil per day.
The claim that it’s the first refinery in 50 years isn’t entirely accurate. Should it become operational, it will be the first new refinery capable of refining more than 135,500 barrels of oil per day since 1977.
Before it produces refined products, it will need to weather federal permitting and a slew of lawsuits that environmental groups will surely throw at it. If it manages to rise above these challenges victoriously, it will add substantial, valuable refining capacity to the U.S. inventory.
At first, if you don’t succeed…
This is not the first time American First Refinery set out to build the “first refinery in 50 years.” The company is a rebranding of Elemental Fuel Holdings. John Calce was the founder and chairman of both companies, and the Elemental Holdings website now directs to the American First Refinery website, which archives Elemental’s old press releases.
In 2024, Elemental Fuel Holdings announced it was building a new refinery in Brownsville, Texas — the first in 50 years. The company said it was investing between $3 billion and $4 billion in the project, according to the Houston Business Journal.
The company planned to build a 165-megawatt power plant on the site, which would be powered by hydrogen produced by the refinery. Some of the hydrogen would be produced with natural gas and carbon capture, which is called “blue hydrogen.” This would supply all the refineries’ power needs, according to Elemental.
It was the third time Calce had proposed a refinery project, Reuters reported in 2024. His previous startups — ARX Energy and JupiterMLP — had planned refineries. Calce told Reuters that the efforts under JupiterMLP had failed “for a host of reasons.”
The Elemental Fuel Holdings proposed refinery was struggling to find investors, and like the previous attempts, it too fizzled out at some point.
“Refining is a really tough business. Get in at the wrong part of the cycle, and you are bankrupt unless you have really deep pockets,” Robert Rapier, a chemical engineer and editor-in-chief of Shale Magazine, told Just the News.
American refinery, American oil
The American First Refinery project will be constructed on the America First Refinery complex within the Port of Brownsville. The port is a deepwater seaport that sits on the border between Mexico and the United States and operates as a Free Trade Zone. This means that goods within are not subject to customs duties, quotas and some taxes until they leave the zone and enter the U.S. domestic market.
The new refinery would refine light, sweet crude, which is the grade of oil that comes out of the U.S. shale fields. Most U.S. refining capacity came online prior to the “Shale Revolution,” when U.S. producers used horizontal drilling and hydraulic fracturing techniques to release oil in dense rocks deep below the surface.
The technology allowed the U.S. to become the world’s largest producer of oil and gas, but having been built prior to this unleashing of shale oil, our refineries utilize the heavy, sour crude oil that was the bulk of oil on the market.
Besides needing heavier crude, U.S. refineries need over 18 million barrels of crude oil per day, and the U.S. produces 13.6 million barrels of oil per day. Thus, about 40% of the oil refineries process is imported, and 60% of those imports come from Canada. The rest comes from Saudi Arabia, Iraq, Mexico, and Central and South American countries.
By utilizing American-produced oil, the refinery would be more efficient and have lower costs. The company plans to break ground in April.
Long road ahead
According to American First Refinery, the company received a 9-figure investment from a global entity at a 10-figure valuation. It signed a 20-year offtake term sheet, which is where a buyer agrees to purchase a product over a period of time prior to production. It’s not clear if the agreement American First Refinery has is binding, but these kinds of agreements often aren’t.
Under this agreement, 1.2 billion barrels of U.S.-produced oil will be purchased and refined, a value of $125 billion. The company will produce 50 billion gallons of refined products, and the U.S. trade imbalance will be improved by $300 billion, according to American First Refinery.
Writing in Forbes, energy analyst David Blackmon explains that, while the goals are laudable and the numbers impressive, the company is going to face sizable hurdles. The project will require a lot of capital investment, and it will face supply chain challenges. Regulatory challenges, Blackmon wrote, are the most daunting hurdles it will face.
American First Refinery will need to obtain an air permit from the Environmental Projection Agency. It’s a challenge that has undermined nearly 50 years of attempts to build new refineries. While the current administration will be accommodating, future administrations might not be. The process can be five to seven years, and will likely stretch into the next administration.
Should the refinery come to fruition, its benefits will be real. Besides the benefits to trade and American energy, the facility would result in a lot of high-paying jobs. Perhaps this time, Calce will pull it off.