Category Archives: Valero Energy Corporation

KQED covers rail and oil industry “show and tell” in Sacramento

Repost from KQED Science, NPR

Railroads, Big Oil Move to Ease Fears Over Crude Shipments

By Daniel Potter, KQED Science | February 24, 2015
This CPC-1232 tank car represents an upgrade over an older models criticized for being easily punctured, but critics say there's still much to be desired. (Daniel Potter/KQED)
This CPC-1232 tank car represents an upgrade over an older models criticized for being easily punctured, but critics say there’s still much to be desired. (Daniel Potter/KQED)

Facing growing apprehension among Californians, railroads and oil companies are trying to allay fears over the dangers of hauling crude oil into the state.

Tensions have been heightened by a spate of derailments, as well as a recently unearthed government report with some sobering projections for the potential cost to life and property from such incidents in coming years. Federal regulators are weighing stricter rules governing everything from modernized braking systems to new speed limits.

In a rare move Tuesday in Sacramento, officials with California’s two major railroads, Union Pacific and BNSF, held a media briefing explaining safety measures ranging from computerized stability controls to special foam for choking out fires.

At the California State Railroad Museum, Pat Brady, a hazardous materials manager for BNSF, showed off a newer model tank car with half-inch thick “head shields” – metal plates extending halfway up on either end.  The car was also equipped with “skid protection,” Brady said, pointing to a nozzle underneath that’s designed to break away in a derailment, leaving the valve itself intact, to avert spills.

This tank car, the CPC-1232, is supposed to be safer and harder to puncture than the older DOT-111 version, but it’s facing skepticism after several exploded last week when a train hauling North Dakota crude through West Virginia derailed.

Using a simulator, Union Pacific's William Boyd demonstrates technology making sure train operators don't go too fast or end up on the wrong track. (Daniel Potter/KQED)

Industry officials at the Sacramento briefing were reluctant to comment about that incident, saying not all the facts are in yet, but several emphasized the importance of keeping trains from derailing to begin with, and claiming that more than 99.99 percent of such shipments arrive safely.

Both BNSF and Union Pacific said tracks used to haul crude through California undergo daily visual inspections, said Union Pacific spokesman Aaron Hunt, as well as a battery of high-tech tests.

“We’re using lasers to measure track gauge and track profile to keep trains on tracks,” he said, and also “pushing ultrasonic waves into our rail to detect potential cracks early.”

Hunt says in a typical month, Union Pacific brings in 1,000 to 1,200 cars loaded with oil, a tiny fraction of the company’s in-state freight. BNSF said its oil haul is even less: about two trains a month. But some predict such shipments could soar in the near future.

Also represented at the briefing was Valero Energy, which is hoping to start bringing two fifty-car oil trains a day to its refinery in Benicia.

“Valero as a company has acquired over five thousand rail cars,” said Chris Howe, a health and safety manager at Valero’s Benicia facility. “We’re able to get a number of them committed to our project, so we will likely be using Valero cars of these newer designs.”

The industry’s shift away from the DOT-111 model is “a useful step,” says Patti Goldman, managing attorney with Earthjustice, who adds that the newer cars are still “not nearly safe enough.”

“What you need to do to prevent catastrophes when trains do leave the tracks is have far better tank cars to be able to prevent the leaks and explosions in the first place,” says Goldman.

Earthjustice is in a legal fight pushing for stronger oversight and regulation. Goldman charges that it’s taking a long time to fully phase out older models because the industry is more focused on growing fleets rapidly.

“That’s just inexcusable,” she says. “We don’t think they’re allowed to do that. We think they need to get these hazardous tank cars off the rails before they start increasing the amount of crude oil that’s going to be shipped on the rails.”

 

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.

Bloomberg: California AG Rejects Trade-Secret Claims for Crude-by-Rail

Repost from Bloomberg News

California AG Rejects Trade-Secret Claims for Crude-by-Rail

By Victoria Slind-Flor, Oct 22, 2014

California Attorney General Kamala Harris expressed reservations about the trade-secret provisions in a proposal for a crude-by-rail project in Benicia, California.

In a letter to the city’s Community Development Department, she said the draft environmental impact report for San Antonio-based Valero Energy Corp. (VLO)’s project “frustrates” the California Environmental Quality Act by not disclosing information about which particular crude oil feedstocks would be delivered in as many as 100 tank cars a day.

She said the missing information includes the weight, sulfur content, vapor pressure and acidity of the crude oil feedstocks, information she said is “critical for an adequate analysis” of the effects of the project on public safety and air quality.

Harris said the California governor’s Office of Emergency Services and the state Transportation Department determined that information about the specific characteristics of the crude moved by rail “are not protected trade secrets and should be publicly released.”

The attorney general said these issues “must be addressed and corrected” before the City Council of Benicia takes action on the draft environmental impact report.

Benicia, a city of about 27,000, is on the edge of the Carquinez Strait emptying into San Francisco Bay.

Valero Energy reports second quarter 2014 results

Repost from Energy Global
[Editor: This article refers to “Brent crude oil.”   Wikipedia: “Brent Crude is a major trading classification of sweet light crude oil that serves as a major benchmark price for purchases of oil worldwide. Brent Crude is extracted from the North Sea, and comprises Brent Blend, Forties Blend, Oseberg and Ekofisk crudes (also known as the BFOE Quotation)….Brent is the leading global price benchmark for Atlantic basin crude oils. It is used to price two thirds of the world’s internationally traded crude oil supplies.”  – RS]

Valero Energy reports second quarter 2014 results

31/07/2014

Energy Global special reports

Valero Energy Corporation has reported financial results for the second quarter of 2014 (Q2). Net income from continuing operations attributable to Valero stockholders was US$ 651 million, US$ 1.22/share, compared to US$ 463 million, US$ 0.84/share, for the second quarter of last year.

Operating income for Q2 was approximately US$ 1.1 billion compared to US$ 805 million in the second quarter of 2013. The US$ 280 million increase in operating income was due primarily to higher refining throughput volumes and wider discounts relative to Brent crude oil for sour and certain North American light crude oils. These positive drivers were partially offset by weaker gasoline and distillate margins relative to Brent crude oil in most regions and higher natural gas costs in the second quarter of 2014 versus the second quarter of 2013.

Valero CEO and President Joe Gorder commented: “Valero delivered solid financial results for the quarter despite generally weaker product margins relative to Brent crude oil. We continued to execute our strategy to reduce feedstock costs by processing additional volumes of cost advantaged North American crude oil and investing in logistics assets to deliver those feedstocks to our refineries”.

Refining throughput volumes averaged 2.7 million bpd for Q2, an increase of 115 000 bpd from the second quarter of 2013. According to Valero, the increase in volumes was due primarily to less turnaround activity and higher utilisation rates spurred by the availability of discounted North American light crude oil on the US Gulf Coast.

“We increased North American crude oil consumption at our Quebec City refinery to 83% in the second quarter of 2014 from 8% in the second quarter of 2013, so we are progressing well toward our previously stated goal of reaching 100% by year-end. We also began processing Canadian bitumen through our new crude-by-rail unloading facility at our St Charles refinery”, Gorder said.

Ethanol operating income for Q2 was US$ 187 million compared to US$ 95 million in the second quarter of 2013. The US$ 92 million increase in operating income was mainly due to higher gross margin per gallon driven by lower corn costs as a result of abundant corn crop and lower industry ethanol inventories at the start of the quarter.

Gorder said: “Our ethanol investments have continued to be strong performers, delivering a total of US$ 430 million in operating income for the first half of 2014. We expect our eleventh ethanol plant, the Mount Vernon facility acquired in March of this year, to begin operating and contributing to the segment’s earnings in the third quarter”.

Capital expenditures for Q2 were US$ 806 million, of which US$ 240 million was for turnarounds and catalyst. Valero paid US$ 133 million in dividends on its common stock and US$ 228 million to purchase 4.0 million shares of its common stock. The company repaid US$ 200 million of debt that matured in April and ended the quarter with US$ 6.4 billion in total debt and US$ 3.5 billion of cash and temporary cash investments, of which US$ 382 million was held by Valero Energy Partners LP.

Valero expects 2014 capital expenditures, including turnaround and catalyst, to be US$ 3 billion, including approximately US$ 870 million allocated to logistics investments, most of which are expected to be eligible for drop-down into Valero Energy Partners LP in the future.

“Given the strong North American crude oil production growth, we continue to focus the majority of our strategic capital on light crude oil processing capability and logistics”, Gorder said. “We expect our refineries to benefit from access to lower cost crude oil and higher netback product export markets.”

Adapted from a press release by Emma McAleavey.