September 9, 2011 at 4:23 pm #2130
Valero forecasts gains from 2012 capital projects
Houston, 8 September 2011 (Argus) New hydrocrackers at Valero’s 325,000 b/d Port Arthur, Texas, refinery and 250,000 b/d, St Charles, Louisiana, refinery are set to increase the US independent refiner’s liquids volume by 1.4pc in 2013, chief executive Bill Klesse said at an energy conference hosted by investment bank Barclays Capital.
Valero projected a 20pc rate of return from those projects along with a new hydrogen plant at its 190,000 b/d Memphis, Tennessee, refinery, new products pipeline in Montreal, Quebec, and a biodiesel project at St Charles.
We are a very capital intensive business and there’s always a long lead time, but the actions we are taking are improving our company’s competitiveness greatly, Klesse said.
The hydrocracker projects were on schedule and budget, and would increase unit operating rates to 60,000 b/d from 50,000 b/d at both sites. Valero projected to improve its rate of return by 1.6 pc in Port Arthur and 2.7 pc rate of return at St. Charles.
Klesse was not concerned the company was expanding into a glut of global capacity, noting the company’s increase in capacity had not immediately translated into an increase in throughput.
Many refineries around the world need additional investment, are limited to processing sweet crude or, in the case of some Latin American operations, have trouble running at capacity, he said.
It always comes in steps, Klesse said. Over the next several years I think refining is going to be fine. That’s why I’m hanging around.
Klesse also said the recently announced Sunoco decision to sell or idle at 330,000 b/d refinery in Philadelphia, Pennsylvania, and a 175,000 b/d refinery in nearby Marcus Hook did not change Valero’s strategy.
We made a decision to exit the east coast of the US in refining, and we bought the Pembroke [Wales] refinery and we think we’re in a much stronger position, Klesse said. On acquisitions that are out there, may be out there, who knows? But we think we’re in a strong strategic position.
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