Valero Building Power Plant at U.K. Refinery

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The world's largest independent petroleum refiner Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas) has committed to spending £127 million ($176 million) to build a combined heat and power (CHP) plant at its Pembroke refinery in Wales, U.K.

The project, which was green lit as a Development of National Significance process under the Planning (Wales) Act 2015, will see the construction of a 45-megawatt (MW) plant designed to provide power to the oil refinery. Valero purchased the Pembroke refinery in 2011 from Chevron Corporation (NYSE:CVX) (San Ramon, California) for £447 million ($620 million), marking its entrance to the European refining sector. Valero said the plant will help it better control future electricity costs and achieve greater energy efficiency.

The refinery currently imports approximately 41 MW of electricity from the National Grid to power various on-site process facilities. The refinery has a significant steam demand that is generated by on-site boilers. The new plant will burn natural gas, recycling 50 tonnes of high-pressured steam per hour.

"This project is important to maintaining the refinery's long-term viability," said Valero's vice president and refinery general manager Ed Tomp. "The decision to approve our CHP unit plans by Valero management caps a year of tremendous effort to obtain approval for this major investment in the Welsh economy. We appreciate the Welsh government's support and planning permission, it is a testament to our collaborative approach with the Welsh government, regulators, and the public."

The project was welcomed by Wales First Minister Carwyn Jones: "This project is a huge boost to the economy of southwest Wales, on a similar scale to transformative projects such the Aston Martin site in St. Athan and the Wales International Convention Centre. The Welsh government has been working closely with Valero in supporting this investment, which will allow the company to grow and compete successfully in a global marketplace, ensuring sustainability of employment well into the future. This is great news for the site's 1,000-plus employees and contractors, and a huge boost to the Welsh economy as we celebrate St. David's Day."

Opened in 1964, the refinery is one of the largest and most complex refineries in Western Europe. It makes products including gasoline, diesel fuel, kerosene, liquefied petroleum gas (LPG) and petrochemical feedstocks. About 44% of Pembroke's products are gasolines, including ultra-low sulphur gasoline, and about 40% of products are distillates. Upgrades and installation of special equipment over the years have boosted the plant's complexity and ability to process difficult crudes, such as acidic, heavy crude.

Last month, Valero subsidiary Valero Logistics U.K. Limited announced that it had purchased SemLogistics' Milford Haven fuel storage facility on the west coast of Wales, located across the haven from the Pembroke refinery. The facility is one of the largest petroleum products storage facility in the U.K., with 8.5 million barrels of capacity for storing gasoline, gasoline blendstocks, naphtha, jet fuel, gas oil, diesel, and crude oil.

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