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Released October 22, 2021 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Refiner and alternative fuels producer Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas) is emerging from the doldrums of 2020, when the COVID-19 pandemic put a strong dent in refined product demand. The company's Refining segment posted operating income of $835 million in the just-passed third quarter of 2021, compared with a $629 million operating loss in the third quarter of last year.
In the company's recent third-quarter earnings conference call, Valero Chief Executive Officer Joe Gorder talked about the upswing for refiners. "We saw significant improvement in refining margins globally in the third quarter as economic activity and mobility continued to recover in key markets," he said. "Refining margins were supported by strong recovery in product demand, coupled with product inventories falling to low levels during the quarter." Gorder added that U.S. light product inventories (including gasoline and diesel) were at five-year lows, while demand was about 95% of 2019 levels.
While Hurricane Ida, which made landfall along the Louisiana Gulf Coast in late August, caused temporary downtime at two refineries and the company's Diamond Green Diesel (DGD) plant in Louisiana, the facilities did not sustain significant damage from the storm and were successfully restarted once power and utilities were restored.
However, the shutdowns did affect the company's renewable diesel sales. In the third quarter, Valero's renewable diesel sales averaged 671,000 gallons per day, which was 199,000 gallons per day lower than sales in the prior-year quarter. The shortfall was primarily due to the Louisiana plant's downtime caused by Hurricane Ida.
Despite the shutdown, Valero passed a significant milestone for its Renewable Diesel segment, with the completed expansion of its Diamond Green Diesel plant in Louisiana, known as DGD 2. The company is in the process of starting up the new unit, which increases the plant's production capacity to close to 700 million gallons per year. Subscribers to Industrial Info's Global Market Intelligence (GMI) Alternative Fuels Project Database can click here for the project report.
But Valero isn't done with its renewable diesel expansions. In Port Arthur, Texas, the company is developing its brownfield DGD 3 project. Gorder said the project continues to progress and still is expected to be operational in the first half of 2023. "With the completion of this 470 million-gallon-per-year plant, DGD's total annual capacity is expected to be 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha," he said. Subscribers can click here for the project report.
Other notable achievements in the just-passed quarter include the completion of a 49.9-megawatt cogeneration unit at Valero's 220,000-barrel-per-day (BBL/d) refinery in Pembroke, Wales. Gorder said the unit will increase the refinery's competitiveness. Subscribers to Industrial Info's Refining Project Database can click here for the project report.
Among Valero's biggest refining projects is the addition of a delayed coker unit at its 400,000-BBL/d Port Arthur refinery. The 55,000-BBL/d unit will produce additional vacuum gas oil to supply the hydrocrackers and is expected to increase the refinery's utilization rate and improve turnaround efficiency. Subscribers can click here for the project report.
Valero also has teamed up with Navigator Energy Services LLC (Dallas, Texas) and BlackRock Incorporated (NYSE:BLK) (New York, New York) to create a carbon capture and storage (CCS) system in the U.S. Midwest, which includes pipelines and storage. The initial phase is expected to span more than 1,200 miles of new CO2 gathering and transmission pipelines across five states and will be able to store 5 million metric tons of CO2 per year. Gorder said the project is progressing on schedule, and Navigator has received the necessary board approvals for the carbon-capture pipeline system after a successful open season. Gorder said, "Valero is expected to be the anchor shipper, with eight ethanol plants connected to this system, which should provide a high ethanol product margin uplift." Subscribers to Industrial Info's Terminals and Pipelines Project Databases can click here for the related project reports.
Valero reported third-quarter 2021 net income of $463 million, compared with a net loss of $464 million in the corresponding period of 2020. And things may continue looking up for the company. With the Louisiana renewable diesel plant back up and running (and hurricane season nearly over), renewable diesel sales should be back on track in the fourth quarter. Overall demand for the company's products could be higher as well. Gorder said, "The expected high natural gas prices in Europe and Asia through the winter should further support liquid fuels demand as power generation facilities, industrial consumers and petrochemical producers see incentives to switch from natural gas to refinery oil products for feedstock and energy needs."
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 third-quarter earnings conference call, Valero Chief Executive Officer Joe Gorder talked about the upswing for refiners. "We saw significant improvement in refining margins globally in the third quarter as economic activity and mobility continued to recover in key markets," he said. "Refining margins were supported by strong recovery in product demand, coupled with product inventories falling to low levels during the quarter." Gorder added that U.S. light product inventories (including gasoline and diesel) were at five-year lows, while demand was about 95% of 2019 levels.
While Hurricane Ida, which made landfall along the Louisiana Gulf Coast in late August, caused temporary downtime at two refineries and the company's Diamond Green Diesel (DGD) plant in Louisiana, the facilities did not sustain significant damage from the storm and were successfully restarted once power and utilities were restored.
However, the shutdowns did affect the company's renewable diesel sales. In the third quarter, Valero's renewable diesel sales averaged 671,000 gallons per day, which was 199,000 gallons per day lower than sales in the prior-year quarter. The shortfall was primarily due to the Louisiana plant's downtime caused by Hurricane Ida.
Despite the shutdown, Valero passed a significant milestone for its Renewable Diesel segment, with the completed expansion of its Diamond Green Diesel plant in Louisiana, known as DGD 2. The company is in the process of starting up the new unit, which increases the plant's production capacity to close to 700 million gallons per year. Subscribers to Industrial Info's Global Market Intelligence (GMI) Alternative Fuels Project Database can click here for the project report.
But Valero isn't done with its renewable diesel expansions. In Port Arthur, Texas, the company is developing its brownfield DGD 3 project. Gorder said the project continues to progress and still is expected to be operational in the first half of 2023. "With the completion of this 470 million-gallon-per-year plant, DGD's total annual capacity is expected to be 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha," he said. Subscribers can click here for the project report.
Other notable achievements in the just-passed quarter include the completion of a 49.9-megawatt cogeneration unit at Valero's 220,000-barrel-per-day (BBL/d) refinery in Pembroke, Wales. Gorder said the unit will increase the refinery's competitiveness. Subscribers to Industrial Info's Refining Project Database can click here for the project report.
Among Valero's biggest refining projects is the addition of a delayed coker unit at its 400,000-BBL/d Port Arthur refinery. The 55,000-BBL/d unit will produce additional vacuum gas oil to supply the hydrocrackers and is expected to increase the refinery's utilization rate and improve turnaround efficiency. Subscribers can click here for the project report.
Valero also has teamed up with Navigator Energy Services LLC (Dallas, Texas) and BlackRock Incorporated (NYSE:BLK) (New York, New York) to create a carbon capture and storage (CCS) system in the U.S. Midwest, which includes pipelines and storage. The initial phase is expected to span more than 1,200 miles of new CO2 gathering and transmission pipelines across five states and will be able to store 5 million metric tons of CO2 per year. Gorder said the project is progressing on schedule, and Navigator has received the necessary board approvals for the carbon-capture pipeline system after a successful open season. Gorder said, "Valero is expected to be the anchor shipper, with eight ethanol plants connected to this system, which should provide a high ethanol product margin uplift." Subscribers to Industrial Info's Terminals and Pipelines Project Databases can click here for the related project reports.
Valero reported third-quarter 2021 net income of $463 million, compared with a net loss of $464 million in the corresponding period of 2020. And things may continue looking up for the company. With the Louisiana renewable diesel plant back up and running (and hurricane season nearly over), renewable diesel sales should be back on track in the fourth quarter. Overall demand for the company's products could be higher as well. Gorder said, "The expected high natural gas prices in Europe and Asia through the winter should further support liquid fuels demand as power generation facilities, industrial consumers and petrochemical producers see incentives to switch from natural gas to refinery oil products for feedstock and energy needs."
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.
