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Released October 23, 2020 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Like other refiners, Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas) saw demand plummet for its products when lockdowns and stay-at-home orders hit the world late in the first quarter and into the second quarter of 2020. Despite some opening up of business and travel, demand is still down from last year.
However, the refiner's situation may be slowly improving. Valero's refining throughput volumes were 2.5 million barrels per day (BBL/d) in the third quarter, compared with 2.3 million BBL/d in the second quarter; throughput capacity utilization in the third quarter was 80%, compared with 74% in the second quarter. Valero's gasoline and diesel exports also were up in the third quarter, rising to 316,000 BBL/d from 170,000 BBL/d in the second quarter.
In Thursday's third-quarter earnings conference call, Valero Chief Executive Officer Joe Gorder discussed the company's situation and touched on the progress of some of its capital projects. Gorder said, "The third quarter was another challenging period in which refining margins continued to be pressured by pandemic-imposed restrictions on global economies. These restrictions have limited individual movement and in-person activities across the globe, resulting in lower demand for finished refinery products. This, in turn, has created less incentive to produce crude oil and has led to narrower crude oil discounts compared to last year."
But the situation is getting marginally better. Gorder said that relative to the second quarter, U.S. Department of Energy Statistics showed that gasoline, diesel and jet fuel demand increased by 25%, 7% and 57%, respectively, in the third quarter.
One of the company's bright spots is its renewable fuels segments. While the Refining segment reported an operating loss of $629 for the quarter, Valero's Renewable Diesel segment had operating income of $184 million, and its Ethanol segment had operating income of $22 million. The strength of the Renewable Diesel business is shown in its capital spending plans. Valero plans to spend about $2 billion in both 2020 and 2021 on capital expenditures. About 40% of this will be allocated for growth projects, 40% of which will go toward expanding its renewable diesel business.
Gorder said Valero's Diamond Green diesel expansion project in Norco, Louisiana, which is designed to more than double the facility's yearly diesel production capacity from 275 million gallons to 675 million gallons, is expected to be completed in 2021. The project kicked off late last year. For more information, see Industrial Info's project report.
Gorder said the company's subsidiary, Diamond Green Diesel, "also continues to make progress on the advanced engineering review for a potential new 400 million-gallons-per-year renewable diesel plant at our Port Arthur, Texas, refinery." If the project moves ahead, construction could kick off next year, taking an estimated three years to complete. For more information, see Industrial Info's project report.
Gorder also touched on other Valero projects, including the addition of a 17,000-BBL/d sulfuric acid alkylation unit at its refinery in Saint Charles, Louisiana. The unit will convert low-value feedstocks into a premium alkylate product. Gorder said the project remained on track to be completed this quarter. Construction began early 2019, with Burns & McDonnell Incorporated (Kansas City, Missouri) providing engineering, procurement and construction (EPC). For more information, see Industrial Info's project report.
In Port Arthur, Valero is underway with the addition of a 55,000-BBL/d delayed coker unit to produce additional vacuum gas oil to supply the hydrocrackers. Construction began late last year, but the mechanical and electrical aspects were delayed due to COVID-19. The project is on track to be completed in 2023. For more information, see Industrial Info's project report.
At its refinery in Pembroke, Wales, Valero is installing a 49.9-megawatt cogeneration unit that is expected to be completed in 2021. Fluor Corporation (NYSE:FLR) (Irving, Texas) is providing EPC. For more information, see Industrial Info's project report.
Gorder indicated that some of Valero's future projects could lean toward more environmental sustainability. He said, "We're also evaluating a number of other low-carbon growth projects that are in the development phase of our gated process."
Valero reported a third-quarter 2020 net loss of $464 million, compared with net income of $609 million in third-quarter 2019. 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.
However, the refiner's situation may be slowly improving. Valero's refining throughput volumes were 2.5 million barrels per day (BBL/d) in the third quarter, compared with 2.3 million BBL/d in the second quarter; throughput capacity utilization in the third quarter was 80%, compared with 74% in the second quarter. Valero's gasoline and diesel exports also were up in the third quarter, rising to 316,000 BBL/d from 170,000 BBL/d in the second quarter.
In Thursday's third-quarter earnings conference call, Valero Chief Executive Officer Joe Gorder discussed the company's situation and touched on the progress of some of its capital projects. Gorder said, "The third quarter was another challenging period in which refining margins continued to be pressured by pandemic-imposed restrictions on global economies. These restrictions have limited individual movement and in-person activities across the globe, resulting in lower demand for finished refinery products. This, in turn, has created less incentive to produce crude oil and has led to narrower crude oil discounts compared to last year."
But the situation is getting marginally better. Gorder said that relative to the second quarter, U.S. Department of Energy Statistics showed that gasoline, diesel and jet fuel demand increased by 25%, 7% and 57%, respectively, in the third quarter.
One of the company's bright spots is its renewable fuels segments. While the Refining segment reported an operating loss of $629 for the quarter, Valero's Renewable Diesel segment had operating income of $184 million, and its Ethanol segment had operating income of $22 million. The strength of the Renewable Diesel business is shown in its capital spending plans. Valero plans to spend about $2 billion in both 2020 and 2021 on capital expenditures. About 40% of this will be allocated for growth projects, 40% of which will go toward expanding its renewable diesel business.
Gorder said Valero's Diamond Green diesel expansion project in Norco, Louisiana, which is designed to more than double the facility's yearly diesel production capacity from 275 million gallons to 675 million gallons, is expected to be completed in 2021. The project kicked off late last year. For more information, see Industrial Info's project report.
Gorder said the company's subsidiary, Diamond Green Diesel, "also continues to make progress on the advanced engineering review for a potential new 400 million-gallons-per-year renewable diesel plant at our Port Arthur, Texas, refinery." If the project moves ahead, construction could kick off next year, taking an estimated three years to complete. For more information, see Industrial Info's project report.
Gorder also touched on other Valero projects, including the addition of a 17,000-BBL/d sulfuric acid alkylation unit at its refinery in Saint Charles, Louisiana. The unit will convert low-value feedstocks into a premium alkylate product. Gorder said the project remained on track to be completed this quarter. Construction began early 2019, with Burns & McDonnell Incorporated (Kansas City, Missouri) providing engineering, procurement and construction (EPC). For more information, see Industrial Info's project report.
In Port Arthur, Valero is underway with the addition of a 55,000-BBL/d delayed coker unit to produce additional vacuum gas oil to supply the hydrocrackers. Construction began late last year, but the mechanical and electrical aspects were delayed due to COVID-19. The project is on track to be completed in 2023. For more information, see Industrial Info's project report.
At its refinery in Pembroke, Wales, Valero is installing a 49.9-megawatt cogeneration unit that is expected to be completed in 2021. Fluor Corporation (NYSE:FLR) (Irving, Texas) is providing EPC. For more information, see Industrial Info's project report.
Gorder indicated that some of Valero's future projects could lean toward more environmental sustainability. He said, "We're also evaluating a number of other low-carbon growth projects that are in the development phase of our gated process."
Valero reported a third-quarter 2020 net loss of $464 million, compared with net income of $609 million in third-quarter 2019. 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.
