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Released April 26, 2021 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Refiner Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas) faced outages at some of its facilities during Winter Storm Uri, but the company recovered quickly and remains optimistic about refined product demand as more people return to travelling.
In the company's recent earnings-related conference call, Valero Chief Executive Officer Joe Gorder said: "Winter Storm Uri disrupted many U.S. Gulf Coast and Mid-Continent facilities in February, due to the freeze and utilities curtailments. Although our refineries and plants in those regions were also impacted, they did not suffer any significant mechanical damage and were restarted within a short period after the storm. While we did incur extremely high energy costs, I'm very proud of the Valero team for safely managing the crisis by idling or shutting down the affected facilities and resuming operations without incident."
Valero's refining segment reported an adjusted operating loss of $554 million for first-quarter 2021, compared with adjusted operating income of $329 million for first-quarter 2020. Last quarter's operating loss in the segment was due to largely to excess energy charges of $525 million caused by Winter Storm Uri. First-quarter throughput volumes averaged 2.4 million barrels per day (BBL/d), which was 414,000 BBL/d less than the same period of 2020, due to scheduled maintenance and disruptions from the storm.
While Valero suffered from Uri and has seen product demand plummet during the pandemic, executives seem to think the worst may be behind them. Gorder noted that with so many refineries offline, there was a 60 million-barrel drawdown of surplus product inventories, bringing them down to normal levels. These lower inventories and increasing demand improved refining margins significantly from the prior quarter.
"As we head into summer, we believe that there's a pent-up desire among much of the population to travel and take vacations, which should drive incremental demand for transportation fuels," Gorder said, noting that the company had seen a strong recovery in gasoline and diesel, at 93% and 100% of pre-pandemic levels, respectively. In addition, data from the U.S. Transportation Security Administration show the air travel passenger count is now nearly double what it was in January.
While the company continues to make investments in its traditional refineries, such as a delayed coker unit addition at its facility in Port Arthur, Texas (Refining database subscribers can click here for the project report), Valero is funneling a large part of its funds into its renewables segment. Valero expects capital investments to be approximately $2 billion this year, with about 60% of this going toward sustaining the business and 40% toward growth. Vice President of Investor Relations Homer Bhullar said almost half of the company's growth spending would go toward the company's renewable diesel business.
Click image above to expand Map of Valero Assets.
Valero's largest project underway in this area is the expansion of its Diamond Green Diesel plant near St. Charles, Louisiana, which will add 400,000 gallons per year of renewable diesel capacity, raising the plant's production capacity to 690 million gallons per year. Gorder said the expansion was expected to be completed in the middle of the fourth quarter of this year. If you subscribe to Industrial Info's Alternative Fuels database, click here for the project report.
Valero also is moving forward with a brownfield renewable diesel unit at its Port Arthur facility that will produce 470 million gallons per year of diesel, as well as renewable naphtha. This facility is expected to be operational in the second half of 2023. If you subscribe to Industrial Info's Alternative Fuels database, click here to see project report. Gorder said when the Port Arthur project is complete, Valero's Diamond Green Diesel segment is expected to have an overall production capacity of 1.2 billion gallons per year of renewable diesel and 50 million gallons per year of renewable naphtha.
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.
In the company's recent earnings-related conference call, Valero Chief Executive Officer Joe Gorder said: "Winter Storm Uri disrupted many U.S. Gulf Coast and Mid-Continent facilities in February, due to the freeze and utilities curtailments. Although our refineries and plants in those regions were also impacted, they did not suffer any significant mechanical damage and were restarted within a short period after the storm. While we did incur extremely high energy costs, I'm very proud of the Valero team for safely managing the crisis by idling or shutting down the affected facilities and resuming operations without incident."
Valero's refining segment reported an adjusted operating loss of $554 million for first-quarter 2021, compared with adjusted operating income of $329 million for first-quarter 2020. Last quarter's operating loss in the segment was due to largely to excess energy charges of $525 million caused by Winter Storm Uri. First-quarter throughput volumes averaged 2.4 million barrels per day (BBL/d), which was 414,000 BBL/d less than the same period of 2020, due to scheduled maintenance and disruptions from the storm.
While Valero suffered from Uri and has seen product demand plummet during the pandemic, executives seem to think the worst may be behind them. Gorder noted that with so many refineries offline, there was a 60 million-barrel drawdown of surplus product inventories, bringing them down to normal levels. These lower inventories and increasing demand improved refining margins significantly from the prior quarter.
"As we head into summer, we believe that there's a pent-up desire among much of the population to travel and take vacations, which should drive incremental demand for transportation fuels," Gorder said, noting that the company had seen a strong recovery in gasoline and diesel, at 93% and 100% of pre-pandemic levels, respectively. In addition, data from the U.S. Transportation Security Administration show the air travel passenger count is now nearly double what it was in January.
While the company continues to make investments in its traditional refineries, such as a delayed coker unit addition at its facility in Port Arthur, Texas (Refining database subscribers can click here for the project report), Valero is funneling a large part of its funds into its renewables segment. Valero expects capital investments to be approximately $2 billion this year, with about 60% of this going toward sustaining the business and 40% toward growth. Vice President of Investor Relations Homer Bhullar said almost half of the company's growth spending would go toward the company's renewable diesel business.
Click image above to expand Map of Valero Assets. Valero's largest project underway in this area is the expansion of its Diamond Green Diesel plant near St. Charles, Louisiana, which will add 400,000 gallons per year of renewable diesel capacity, raising the plant's production capacity to 690 million gallons per year. Gorder said the expansion was expected to be completed in the middle of the fourth quarter of this year. If you subscribe to Industrial Info's Alternative Fuels database, click here for the project report.
Valero also is moving forward with a brownfield renewable diesel unit at its Port Arthur facility that will produce 470 million gallons per year of diesel, as well as renewable naphtha. This facility is expected to be operational in the second half of 2023. If you subscribe to Industrial Info's Alternative Fuels database, click here to see project report. Gorder said when the Port Arthur project is complete, Valero's Diamond Green Diesel segment is expected to have an overall production capacity of 1.2 billion gallons per year of renewable diesel and 50 million gallons per year of renewable naphtha.
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.
