Category Archives: Valero Energy Corporation

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.

Valero logs record high net income in first quarter 2015

Repost from MySA, San Antonio, TX

Valero logs record high first quarter

By Vicki Vaughan : April 28, 2015

Valero Energy Corp. on Tuesday reported a record high first quarter based on strong performance from its refining segment.

Valero’s net income from continuing operations rose 16 percent, to $964 million, or $1.87 a share, compared to $829 million, or $1.54 a share, for the same period a year ago.

The results handily beat analysts’ estimates that the San Antonio-based refiner would earn $1.72 a share.

“Our team’s solid performance and favorable margins helped us deliver impressive results during a heavy planned-maintenance period in the first quarter,” CEO Joe Gorder said in a statement.

Valero’s refineries processed more crude oil in the quarter, handling 2.7 million barrels a day, an increase of 9,000 barrels a day in the first quarter of 2014.

Trains in Canada derailments carried synthetic crude for Valero

Repost from Reuters

Trains in Canada derailments carried synthetic crude for Valero

TORONTO, Mar 10, 2015 12:56pm EDT

(Reuters) – The two oil trains that derailed and burst into flames in recent weeks in northern Ontario were both carrying synthetic crude to Valero Energy Corp’s refinery near Quebec City, the U.S.-based company said on Tuesday.

Saturday’s CN Rail derailment came less than a month after another CN train carrying oil went off the tracks and ignited in northern Ontario. The railway had said both were carrying crude from Alberta, but declined to give their exact destination.

“We take safety very seriously, so we’re concerned anytime there’s an incident,” said Valero spokesman Bill Day. “Despite the number of rail incidents recently, it is very rare for cargo not to be delivered to its destination safely.”

Day said all of the rail companies Valero works with, including CN Rail, have good safety records.

Synthetic crude is produced from Alberta’s oil sands in upgrader plants, and usually commands a premium to conventional crudes because it is lighter and easier to refine into valuable byproducts such as gasoline.

Valero’s Jean Gaulin refinery is in Levis, across the St. Lawrence River from Quebec City.

In May 2013, the company said it would build a rail off-loading facility at the Jean Gaulin refinery so it could start using Western Canadian crude rather than relying on pricier imports. The company told Reuters it would take light, sweet Western Canadian crude rather than heavier oil sands crude.

Shipments of North American crude to the refinery ramped up early last year. On a July earnings call, the company said North American grades made up 83 percent of the refinery’s feedstock in the second quarter of 2014, up from 45 percent in the first quarter and 8 percent higher than a year earlier.

Separately on Tuesday, CN spokesman Jim Feeny said the train that derailed in February had been carrying petroleum distillates in addition to synthetic crude.

“The contents of the tank cars are a subject of interest and the TSB will be testing the contents to determine what they were,” said John Cottreau, spokesman for Canada’s Transportation Safety Board, which is investigating the incidents.

In a note to shippers on Tuesday, CN said a temporary bypass track would likely be completed by late afternoon, reopening its main line in northern Ontario.

(Reporting by Allison Martell in Toronto, and Scott Haggett and Nia Williams in Calgary; Editing by Alan Crosby)

BENICIA HERALD LETTER TO THE EDITOR: Dr. James Egan: Deny Valero’s application

From The Benicia Herald (Benicia Herald letters appear only in the print edition)
[Editor:  Dr. Egan’s letter is a welcome contribution, expressing the growing conviction of many throughout North America, that crude-by-rail is simply unsafe under current conditions, and should be not be permitted at this time.  See also Dr. Egan’s 9/14/14 comments addressing the Valero Crude By Rail Draft EIR.  – RS]

Timely decision on crude by rail warranted: Deny Valero’s application

By James Egan, M.D., Benicia, March 10, 2015

The headline in the Feb. 5, 2015 edition of The Herald, “Another delay as crude-by-rail project debate enters 3rd year,” signals sympathy toward the Valero Benicia Refinery as regards its Crude by Rail (CBR) Use Permit Application, currently before the Planning Commission.  While it is difficult working up crocodile tears for a multi-billion-dollar international oil corporation, the energy and expense invested in forwarding this project bear acknowledgement, and a timely decision on the application should be made out of fairness to the applicant.  To that end, I would like to suggest that the Planning Commission and the City Council have enough information available to take action at any time.  The application should be denied on the basis of rail safety.

On Feb. 17 of this year a crude oil train derailed and exploded in Mount Carbon, W.Va.  Three million gallons of Bakken crude spilled from 26 ruptured tank cars, forcing the evacuation of two nearby towns.  Two days prior, another oil train derailed and caught fire in Ontario, Canada.  Last Thursday, March 5, 21 cars carrying Bakken crude derailed, split and exploded near Galena, Ill.  Another of the dozens of oil- or ethanol-train accidents involving a fire, derailment or significant fuel spill reported in the U.S. or Canada since 2006 was the Lynchburg, Va. derailment and fire in April 2014.

The significance of this particular series of railway disasters to the citizens of Benicia is that they all involved CPC-1232 tank cars, the same cars that Valero would use for the transportation of crude to its facility in Benicia, according to the Draft Environmental Impact Report.

In a Feb. 23 editorial titled, “Get rid of exploding tank cars,” the San Francisco Chronicle states that “Valero Energy Co. has agreed to haul Bakken crude to its Benicia bayside refinery in the newer CPC-1232 cars as part of its city permit application to revamp its facilities to receive crude by rail rather than by oceangoing tanker.  But that promise now appears inadequate to protect the safety of those in Benicia as well as in other communities – Roseville, Sacramento, Davis – along the line.”

The same edition of the Chronicle details a report from the Department of Transportation predicting that trains hauling crude oil or ethanol will derail 15 times in 2015 and average 10 times yearly over the next two decades, causing $4.5 billion in damage with potential fatalities of more than 200 people in a given accident.  This may actually be an underestimate based on recent major derailment rates.

Friends and foes of CBR alike agree that the transportation of crude oil by rail involves inherent risk.  Can’t we also agree that the risk should be reduced to the greatest extent possible before inviting these potentially explosive trains to Benicia?  Lowering the risk of tank car derailment, rupture and explosion now should translate into saved human lives and prevention of environmental disasters in the future.

The danger can, in fact, be mitigated.  The crude can be stabilized prior to its transportation by extraction of its most volatile components.  North Dakota has implemented standards making this mandatory for Bakken crude, but many feel that their new guidelines are overly lax.  New federal regulations due to be released in May could further address this, as would rail safety measures such as Positive Train Control and electronically controlled pneumatic brakes.  New, safer tank cars designed specifically to carry this type of crude have been designed and are in production.

Unfortunately, the new federal guidelines will likely require years for full enforcement, and complete phaseout of the existing, unreliable tank car fleet by newer, stronger cars, such as the Greenbrier HM-251, will also require years of effort.

Accordingly, if we agree that the risks of transportation of crude by rail should be absolutely minimized prior to approving the CRB project, we have to acknowledge that this is currently beyond Valero’s reach and the Use Permit Application should be denied.

Those who would roll the dice and approve the current application should consider how comfortable they will feel with that decision once they find themselves in a front row seat at the Park/Bayshore railroad crossing watching fifty tank cars containing 1,470,000 gallons of potentially explosive crude rumble by on the same spur line that has seen derailment of five train cars since Nov. 4, 2013 (in addition to the two locomotives that derailed on Sept. 7, 2014 near the port).

Kudos to Planning Commission members for the time and energy spent on fairly evaluating this project.  It would seem that as time has passed the correct path forward has become much clearer.  At this point, the ongoing health and well-being of all Benicians should hold foremost importance in the decision-making process.  Their protection is the least we can expect from our city government.

James Egan, M.D.