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Valero Open to Selling Ohio Refinery

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This topic contains 1 reply, has 2 voices, and was last updated by  Charles Randall 16 years ago.

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  • #4063


    Valero open to selling Ohio refinery – sources
    NEW YORK, Jan 25, 2007(Reuters) – Valero Energy Corp. , the largest refiner in the United States, is open to bids for its 160,000 barrel per day Lima refinery in Ohio, sources close to the company said on Thursday.
    The refinery could be sold because of the heavy investment needed to upgrade the 121-year-old refinery, and strong competition from regional refineries running Canadian heavy, sour crude, which gives better margins than light, sweet crude.
    “Valero is open to bids for the Lima refinery if the price is right, but it is not out in the market soliciting bids,” a source said.  Mary Rose Brown, Valero’s spokeswoman, declined to comment, citing company policy of not commenting on rumors.
    Valero owns and operates 17 refineries in the United States and Mexico, with a total refining capacity of about 3.3 million bpd. The Lima refinery, has a 40,000 bpd fluid catalytic cracker and 55,000 bpd catalytic reformer.
    The refinery was expected to fetch about $1 billion to $1.5 billion, based on the market rate of $6,000 for every barrel per day refining capacity, said John Parry, a consultant at the energy consulting firm John Herold.
    The potential suitors for Lima refinery were Canada’s Suncor Energy Inc., EnCana, Coffeyville Resources in Kansas, or investment banks, industry sources said.
    “It (Lima) is an old refinery. It will need some major upgrading,” Parry said. “Valero may not want to invest a lot of money into the old refinery, especially when it has to compete with refineries in the Midwest, which run more competitive Canadian crude.”
    ConocoPhillips’ Midwest refineries are running Canadian crude, and Marathon was expected follow suit. The Lima refinery is currently processing mostly sweet, and light sour crude.
    ConocoPhillips has locked in a deal with Encana for Canadian crude supplies, but Valero has not done anything yet,” Parry said.  According to Valero’s Web site, the company began a study on a possible switch to heavy sour crude shipped from Western Canada when it acquired the refinery in 2005. A senior Suncor official said that the Canadian company was not targeting the Lima refinery or engaged in active negotiations for that refinery.
    Besides the preference for Canadian crude in the Midwest, Parry also pointed out the growing ethanol market could cut products demand in that region. Like ConocoPhillips, Valero could also be trying to sell some assets at the peak of the refining asset cycle, he said.

  • #7471

    Charles Randall

    It looks like the Valero expansion for Lima may be put on hold as Valero considers selling Lima Refinery.  When Valero passed on Canadian bitumen crude supplies from EnCanada that it has not found supplier at a price it feels is competitive enough to invest upgrade capital into the 121 year old Sweet crude refinery and it cannot compete running on sweet crude.  EnCanada has recently completed a joint venture with ConocoPhillips locking in its crude supplies into new coker additions that come online in 2007 at COP’s Borger & Woodriver refineries.
    The article forgot to mention that Lima also has an existing 20 mbd delayed coking unit

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