Valero CEO wants to sell 3-5 refineries

Eli

This could get interesting if China steps up as a buyer, I could see them coming in and cutting up an entire refinery and shipping it off to China.

frankthetank

Considering 10 years from now you might not have to run all of them, getting rid of them while they are still worth something is probably smart.
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TexasEx2006 · Coal Joined: Apr 03, 2006 Posts: 16

These types of articles are completely off base if you have no industry experience. The same rhetoric is used constantly and without merit.

Our Thorny Oil Patch

Energy Policy: When America's biggest oil refiner contemplates putting almost a third of its refineries on the market, Congress should sit up and take notice. The business climate it has created is hurting our economy. ( 3 out of 17 isn't even 1/5th, let alone almost 1/3rd)

Valero Energy Corp. is an industry leader that refines more oil than any other in the U.S. The San Antonio, Texas, company had a good run in the stock market this decade, rising 1,400% before earnings topped last year. But it's no longer so easy for the company or any refiner. (This rise was due to the fact that 10 years ago Valero only owned 4 refineries, their growth has been through strategic M&A. They made a point to only acquire refineries that could produce heavy sour crudes. They have purchased under valued refineries, upgraded them and added capacity and then decided to either hold or resell for profit.)

Valero will probably sell three of its 17 refineries this year and maybe two more later to focus on its core operations amid what CEO Bill Klesse acknowledged on Tuesday is a weak economy.

But maybe that's because the environment for the energy business in the U.S. has turned downright hostile.

Upstream, oil drilling is off-limits, crimping supply and driving prices ever higher. Downstream, refiners are hit by not only high energy prices, but also bureaucratic regulations, environmental lobbies and special interests that make moving to Asia, where economic growth is still valued, more attractive. (The upstream reference in this article is out in left field, up and downstream businesses are managed completely separate. Yes higher fuel costs hurt the refiners, as it is their biggest cost, not operating, not employees, etc.)

The sorry fact that no new refinery has been built in America since 1983 has been cited so many times that we would have thought someone in Washington would have done something about it by now. But no — it just keeps getting worse. (This statement is spit out time and time again by clueless media types. Why would you build a grassroots unit when it is far more intelligent to expand existing facilities, or to debottleneck to increase throughput. Anyone working in anything equipment supply or service supply in the refining business will tell you that there has NEVER been a boom of upgrades and capacity expansions as big as today. Just because the big operators aren't pumping out new grassroot facilities in their entirety, it does not mean that people are not drastically increasing capacities, upgrading facilities, etc.)

Granted the media usually is oblivious to actual problems in the industry, but when they simply start making things up or writing editorially with no facts or history to back up their statements, they're simply spouting off the typical political nonsense.[b]

pup55 · Expert Joined: May 26, 2004 Posts: 3853

TexasEx2006 · Coal Joined: Apr 03, 2006 Posts: 16

Operators are building new refineries. Motiva Port Arthur is doubling capacity, as it Marathon Garyville. These additions will be larger than most of the current refineries operating. There is not a refinery in the country that isn't adding unit, upgrading units, debottlenecking units. This is the same thing as "building" a new refinery. Refineries are not single process units, they contain dozens and dozens of smaller processes throughout the "refinery". These processes are added on a continuous basis.

It is much easier to build on your current site than deal with all of the opponents who drive their automobiles to their Not In My Back Yard protests. People will complain that no grassroots refineries have been constructed and turn around and waive the environmental flag to prevent one from being built. The sad bottom line is crude oil conversion is a dirty business, but if one is going to complain about it, then let them be first to give up everything in their world that is derived from the stuff. There is not a physical item in ones possession that has not in some way shape or form been derived from, transported, or energized by oil & gas.

When Valero sells these refineries, they will be purchased and operated by a new company. This is in no way a bad thing, and will not change refining output in the country one barrel.

TheDude

Thanks for the replies. At least the writer wasn't complaining about oil going into the SPR driving up gas prices. People need to overcome the NIMBY attitude one way or another, whether refineries or Cape Cod windmills. Hearing about the Kennedys' opposition to the latter is good for a chuckle at least.