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Valero will soon have fifth refinery processing 100 percent North American crude

Repost from the San Antonio Business Journal
[Editor: Note brief reference to Valero’s Benicia Refinery at end of this article.   – RS]

Valero will soon have fifth refinery processing 100 percent North American crude

By Sergio Chapa, Sep 11, 2015, 6:44pm CDT
File photo Valero Energy Corporation's Jean Gaulin Refinery in Quebec City
File photo – Valero Energy Corporation’s Jean Gaulin Refinery in Quebec City

San Antonio-based Valero Energy Corp. is expected to have its fifth refinery capable of processing nothing but North American crude by the end of the year.

Valero (NYSE: VLO) revealed in an investors’ presentation released earlier this week that its Jean Gaulin Refinery in Quebec will be processing 100 percent North American crude oil by the end of the year.

Company figures show that the refinery was 100 percent dependent on foreign crude oil in first quarter 2013, but production from the tar sands region of Canada and the shale plays of the United States has dramatically changed the situation.

The Jean Gaulin Refinery is processing about 80 percent North American-sourced crude oil but will be at 100 percent once a project to modify the Enbridge Line 9B Pipeline is completed in the fourth quarter. The project will reverse the flow of the pipeline to enable oil from the tar sands region of Alberta to flow east to Valero’s refinery in Quebec.

Most refineries were built decades ago and were configured to process to Middle Eastern oil, but Valero spokesman Bill Day told the San Antonio Business Journal that the Jean Gaulin Refinery is lined up to be the fifth of the company’s refinery capable of processing 100 percent North American crude oil.

Day said Valero’s Ardmore, McKee, Memphis and Three Rivers refineries can already process 100 percent North American crude oil, while other plants are processing an increasing amount of North American crude.

The investors presentation shows that Valero is expanding its capacity to process a total of 185,000 barrels per day of light sweet crude from the Eagle Ford and other shale plays at the company’s McKee, Houston and Corpus Christi refineries in Texas.

Day said that the addition of the Keystone XL Pipeline would enable Valero to replace foreign heavy crude with heavy crude from Canada. He also noted that a proposed rail terminal at the company’s Benicia refinery in California, would enable Valero to offset foreign crude brought in by ship with North American crude brought in by rail.

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Valero’s third-quarter net income tops $1.1 billion

Repost from The San Antonio Business Journal
[Editor: Significant quote:  “Valero should benefit from rising oil production from shale plays and the Canadian oil sands. However, the refining industry remains volatile and is susceptible to swings of weaker economic conditions, excess industry refining capacity, narrowing margins or reduced throughput rates and higher biofuel blending costs.”  – RS]

Valero’s third-quarter net income tops $1.1 billion

Nov 4, 2014, By James Aldridge
Valero
File photo of Valero Energy Corp.’s Corpus Christi refinery. The company reported earnings per share of $2 for the quarter ended Sept. 30, 2014. Analysts had expected EPS of $1.57 per share.

Valero Energy Corp. beat analyst expectations on Tuesday by reporting net income of $1.1 billion, or $2 per share, for the third quarter ended Sept. 30, 2014. This compares to net income of $312 million, or 57 cents per share, for the same quarter a year ago.

Analysts had been projecting San Antonio-based Valero (NYSE: VLO) to report earnings per share of $1.57 for the third quarter.

President and CEO Joe Gorder said the company’s financial results benefitted from wider discounts for sweet and sour crude oils relative to Brent crude oil, stronger gasoline margins in most of the regions where the company operates and higher refining throughput volumes.

During the quarter, Valero continues to expand capital investments in the company’s refining and logistics business, which gives it the ability to process more North American crude oil. Valero completed construction of a 70,000-barrel-per-day rail unloading facility at its Port Arthur refinery and received additional rail cars. The company also secured the option of purchasing a 50 percent interest in the planned Diamond Pipeline which, when completed, will connect Valero’s Memphis refinery to the crude oil hub in Cushing, Okla.

Analyst Stewart Glickman in her research report at S&P Capital IQ placed a hold recommendation on Valero’s stock. In the report, Valero should benefit from rising oil production from shale plays and the Canadian oil sands. However, the refining industry remains volatile and is susceptible to swings of weaker economic conditions, excess industry refining capacity, narrowing margins or reduced throughput rates and higher biofuel blending costs.

Additional details on the company’s financial performance can be found here.

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