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Released October 25, 2019 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Refiner and renewable fuels producer Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas) reported third-quarter net income $609 million, compared with $856 million in the year-prior quarter. The company's refining and ethanol segments took year-over-year hits, while its renewable diesel segment saw a boost in operating income. Industrial Info is tracking more than $3.9 billion in active Valero projects.
In the company's third-quarter earnings conference call, Valero Chief Executive Officer Joe Gorder gave an update on the company's financials and on its active and recently completed projects. Valero's Refining segment, by far its largest, took the biggest hit, reporting operating income of $1.1 billion in the just-passed quarter, compared with $1.4 billion in third-quarter 2018. Gorder said, "Although gasoline cracks held steady and diesel cracks improved from the previous quarter, heavy and medium sour crude oil discounts to Brent crude oil remained narrow as supply was constrained by geopolitical events." In addition, new Permian takeaway capacity, a boon to the region's oil producers, hurt Valero's bottom line, an aspect of the industry to which it may have to adapt. Gorder said, "The startup of new pipelines from the Permian Basin to the Gulf Coast tightened the WTI [West Texas Intermediate] Midland-to-Cushing crude oil differential." Third-quarter refining capacity utilization was 94%, and the company processed an average of 2.95 million barrels per day (BBL/d).
Higher corn prices caused headwinds in the company's Ethanol segment, which reported an operating loss of $43 million, compared with income of $21 million in third-quarter 2018.
However, the company saw a bright spot in its Renewable Diesel segment, which reported operating income of $65 million, compared with an operating loss of $5 million in the year-prior quarter. With this in mind, Valero is planning to expand this segment of the business, and Gorder addressed these and other projects.
Valero is expanding its Diamond Green renewable diesel plant in Norco, Louisiana, which Gorder said was expected to be completed in 2021. The project entails expanding the existing 275 million-gallon-per-year plant by an additional 400 million gallons per year. For more information, see Industrial Info's project report.
Gorder also spoke about recent plans to expand to company's biodiesel footprint even further. He said, "In September, our Diamond Green Diesel joint venture initiated an advanced engineering and development cost review for a new renewable diesel plant at our Port Arthur, Texas, facility. If the project's approved, construction could begin in 2021, with operations expected to commence in 2024. This would result in Diamond Green Diesel production capacity increasing to over 1.1 billion gallons annually." For more information, see Industrial Info's project report.
Valero is starting to see the benefit of some recently completed projects as well. Gorder said, "During the quarter, we began to enjoy the investments on our new Houston alkylation unit that was commissioned in June and from the recently completed Central Texas Pipeline-to-terminals project."
The alkylation unit upgrades lower-value natural gas liquids and refinery olefins to a premium, high-octane alkylate product. Construction on the 13,000-BBL/d unit began in early 2017, with Burns & McDonnell (Kansas City, Missouri) providing engineering. For more information, see Industrial Info's project report.
The company's Central Texas Pipeline carries refined products to the Taylor refined products terminal. Gorder said the pipeline reduces Valero's secondary costs and extends its supply chain from the Gulf Coast to a growing inland market. For more information, see Industrial Info's project report.
Gorder said other of the company's strategic growth projects remained on target to be completed next year. Among these is the addition of a sulfuric acid alkylation unit at its Saint Charles Refinery in Louisiana. The $400 million project entails constructing a 17,000-BBL/d alkylation unit to increase octane blending in the gasoline pool. Construction began at the start of this year and is expected to be completed next summer. For more information, see Industrial Info's project report.
Valero also is expanding its Port Arthur Refinery in Texas by constructing a delayed coker unit and sulfur recovery unit. Construction on the units kicked off recently and is expected to be completed in 2022. The projects are part of a restarted refinery expansion plan that previously was cancelled more than a decade ago. The 55,000-BBL/d delayed coker unit will produce additional vacuum gas oil to supply the refinery's hydrocrackers, while the sulfur recovery unit will have a capacity of 600 tons per day. The projects have a combined TIV of $975 million. For more information, see Industrial Info's project reports on the delayed coker unit and sulfur recovery unit.
Valero also is expanding and upgrading units at another Texas refinery to comply with the International Maritime Organization's (IMO) fuel standards for sulfur, which sets a limit for sulfur in fuel oil used on board ships to 0.5% mass by mass and will take effect January 1. At its Bill Greehey Refinery - East, Valero is increasing the capacity of a delayed coker unit, currently operating at 15,500 BBL/d, to 22,000 BBL/d by reinstalling an idled debutanizer, as well as performing upgrades to comply with the new IMO standards. Valero also is upgrading the refinery's atmospheric crude unit by debottlenecking the naphtha stabilizer section to allow the processing of additional coker naphtha to comply with the new standards. The projects are expected to be completed later this year. For more information, see Industrial Info's project reports on the delayed coker and crude unit.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
In the company's third-quarter earnings conference call, Valero Chief Executive Officer Joe Gorder gave an update on the company's financials and on its active and recently completed projects. Valero's Refining segment, by far its largest, took the biggest hit, reporting operating income of $1.1 billion in the just-passed quarter, compared with $1.4 billion in third-quarter 2018. Gorder said, "Although gasoline cracks held steady and diesel cracks improved from the previous quarter, heavy and medium sour crude oil discounts to Brent crude oil remained narrow as supply was constrained by geopolitical events." In addition, new Permian takeaway capacity, a boon to the region's oil producers, hurt Valero's bottom line, an aspect of the industry to which it may have to adapt. Gorder said, "The startup of new pipelines from the Permian Basin to the Gulf Coast tightened the WTI [West Texas Intermediate] Midland-to-Cushing crude oil differential." Third-quarter refining capacity utilization was 94%, and the company processed an average of 2.95 million barrels per day (BBL/d).
Higher corn prices caused headwinds in the company's Ethanol segment, which reported an operating loss of $43 million, compared with income of $21 million in third-quarter 2018.
However, the company saw a bright spot in its Renewable Diesel segment, which reported operating income of $65 million, compared with an operating loss of $5 million in the year-prior quarter. With this in mind, Valero is planning to expand this segment of the business, and Gorder addressed these and other projects.
Valero is expanding its Diamond Green renewable diesel plant in Norco, Louisiana, which Gorder said was expected to be completed in 2021. The project entails expanding the existing 275 million-gallon-per-year plant by an additional 400 million gallons per year. For more information, see Industrial Info's project report.
Gorder also spoke about recent plans to expand to company's biodiesel footprint even further. He said, "In September, our Diamond Green Diesel joint venture initiated an advanced engineering and development cost review for a new renewable diesel plant at our Port Arthur, Texas, facility. If the project's approved, construction could begin in 2021, with operations expected to commence in 2024. This would result in Diamond Green Diesel production capacity increasing to over 1.1 billion gallons annually." For more information, see Industrial Info's project report.
Valero is starting to see the benefit of some recently completed projects as well. Gorder said, "During the quarter, we began to enjoy the investments on our new Houston alkylation unit that was commissioned in June and from the recently completed Central Texas Pipeline-to-terminals project."
The alkylation unit upgrades lower-value natural gas liquids and refinery olefins to a premium, high-octane alkylate product. Construction on the 13,000-BBL/d unit began in early 2017, with Burns & McDonnell (Kansas City, Missouri) providing engineering. For more information, see Industrial Info's project report.
The company's Central Texas Pipeline carries refined products to the Taylor refined products terminal. Gorder said the pipeline reduces Valero's secondary costs and extends its supply chain from the Gulf Coast to a growing inland market. For more information, see Industrial Info's project report.
Gorder said other of the company's strategic growth projects remained on target to be completed next year. Among these is the addition of a sulfuric acid alkylation unit at its Saint Charles Refinery in Louisiana. The $400 million project entails constructing a 17,000-BBL/d alkylation unit to increase octane blending in the gasoline pool. Construction began at the start of this year and is expected to be completed next summer. For more information, see Industrial Info's project report.
Valero also is expanding its Port Arthur Refinery in Texas by constructing a delayed coker unit and sulfur recovery unit. Construction on the units kicked off recently and is expected to be completed in 2022. The projects are part of a restarted refinery expansion plan that previously was cancelled more than a decade ago. The 55,000-BBL/d delayed coker unit will produce additional vacuum gas oil to supply the refinery's hydrocrackers, while the sulfur recovery unit will have a capacity of 600 tons per day. The projects have a combined TIV of $975 million. For more information, see Industrial Info's project reports on the delayed coker unit and sulfur recovery unit.
Valero also is expanding and upgrading units at another Texas refinery to comply with the International Maritime Organization's (IMO) fuel standards for sulfur, which sets a limit for sulfur in fuel oil used on board ships to 0.5% mass by mass and will take effect January 1. At its Bill Greehey Refinery - East, Valero is increasing the capacity of a delayed coker unit, currently operating at 15,500 BBL/d, to 22,000 BBL/d by reinstalling an idled debutanizer, as well as performing upgrades to comply with the new IMO standards. Valero also is upgrading the refinery's atmospheric crude unit by debottlenecking the naphtha stabilizer section to allow the processing of additional coker naphtha to comply with the new standards. The projects are expected to be completed later this year. For more information, see Industrial Info's project reports on the delayed coker and crude unit.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
