Marathon Petroleum, Valero Report Strong Earnings, Successful Growth Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--Petroleum refiners Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas) and Marathon Petroleum Corporation (NYSE:MPC) (Findlay, Ohio) announced strong third-quarter earnings yesterday. In conference calls, executives discussed the strong earnings and the companies' continued plans for growth.

Marathon Petroleum's net income for the third-quarter of 2011 was $1.13 billion, compared to $277 million in 3Q10. Quarterly net income for Valero was $1.2 billion, compared to $292 million in the same quarter last year. Both refiners pointed to higher refining margins as contributing to the increase in income, as well as the ability to process heavy and sour crudes, further increasing profits. In addition, Valero's throughput volume increased 389,000 barrels per day (BBL/d). Both refiners cautioned that fourth-quarter spreads would be lower than those of the third quarter.

Valero Chief Financial Officer Mike Ciskowski reported on the progress of some of the company's projects. Ciskowski stated that the hydrogen units being constructed at the company's McKee Refinery near Sunray, Texas, and the Memphis Refinery in Tennessee were on schedule to be completed by the end of this year. The units will produce approximately 30 million standard cubic feet per day of hydrogen for use in the refineries. Technip Incorporated (Claremont, California) performed engineering for the projects, while Performance Contractors Incorporated (Baton Rouge, Louisiana) is providing general contracting and management.

"Our two hydrocracker projects at Port Arthur and St. Charles are set to finish in the second half of 2012," said Ciskowski. For related information, see June 24, 2011, article - Hydrocracker Additions Put Texas, Louisiana at Top of U.S. Refining Industry Spending.

Marathon Petroleum CEO Gary Heminger also spoke about Marathon's current and future plans. The company is performing upgrades at its refinery in Detroit, Michigan. The $2.2 billion project will enable the refinery to process heavier and higher acidic crudes. "Upgrades to our Detroit Refinery were approximately 73% complete as of September 30, 2011. This project remains on budget and on schedule for completion in the second half of 2012. When completed, these upgrades should allow us to process an incremental 80,000 BBL/d of heavy Canadian crude, reducing our feedstock costs and increasing Detroit's crude oil refining capacity about 15% to 120,000 BBL/d."

Heminger discussed the strong profits made from exports of distillate such as diesel. For additional information, see September 6, 2011, article - Increasing Global Diesel Demand Drives Refinery Expansions and Upgrades. "Global demand for distillate continues to increase, providing the opportunity to increase distillate exports to higher-value global markets. During the third quarter, we continued the optimization of Garyville [in Louisiana], which is running significantly above its nameplate capacity. We also increased the amount distillate sold for export from Garyville to approximately 73,000 BBL/d last quarter. With modest additional investment, we believe we can increase our distillate for sale for export even more, providing us with additional options to place even more of our refinery production in higher-value markets."

Information on these and other projects is available in Industrial Info's North American Petroleum Refining Database.

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