Valero's Refining Segment Brings Strong Earnings

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Researched by Industrial Info Resources (Sugar Land, Texas)--Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas) posted strong quarterly financial results thanks to its Refining segment, which brought in operating income of $3.8 billion in the quarter, compared with $835 million for the third quarter of 2021. While the company continues to make improvements and additions to its traditional refineries, Valero, like other energy companies, also is pursuing "greener" endeavors such as renewable diesel.

In a Tuesday conference call with analysts, Valero Chief Executive Officer Joe Gorder spoke of the company's results and discussed projects, both those underway and those planned for the future. Noting that 4 million barrels per day (BBL/d) of global refining capacity had been permanently taken offline since 2020, Gorder said, "Product demand across our system remains strong, with gasoline and diesel demand higher than pre-pandemic levels and jet fuel demand steadily approaching 2019 levels." The company's refining utilization rate during the just-passed quarter was 95%.

Gorder said the company is on schedule with its growth projects. The addition of a delayed coker unit at Valero's refinery in Port Arthur, Texas, is expected to increase the refinery's throughput capacity and improve turnaround efficiency and is planned to be completed in the first half of next year. The four-drum delayed coker will produce additional vacuum gas oil to supply the facility's hydrocrackers. Subscribers to Industrial Info's Global Market Intelligence (GMI) Refining Project Database can click here for more details.

Next to the Port Arthur Refinery, Valero is constructing another renewable diesel plant (DGD 3) for its Diamond Green Diesel (DGD) venture. Gorder said the unit is in the startup process and is expected to be operational next month. The completion of the 475 million-gallon-per-year plant is expected to increase DGD's total annual production capacity to 1.2 billion gallons per year of renewable diesel and 50 million gallons of renewable naphtha. Construction on DGD 3 has been underway since early last year. Subscribers to Industrial Info's Alternative Fuels Project Database can click here for the report.

Valero is expected to be the anchor shipper on Navigator CO2 Ventures' (Omaha, Nebraska) planned Heartland carbon capture and sequestration (CCS) system in the U.S. Midwest. Eight of Valero's ethanol plants in the region will participate, which will lead to ethanol with a lower carbon footprint and higher product margins. Gorder said the system is expected to begin startup activities in late 2024. Subscribers to Industrial Info's Pipeline Project Database can click here for related reports. For more details, see October 12, 2022, article - U.S. Allocates Funding for Carbon Transportation Projects.

And Valero may not be stopping with these renewable diesel and CCS projects in regard to greener undertakings. "We continue to evaluate other low-carbon opportunities, such as sustainable aviation fuel, renewable hydrogen and additional renewable naphtha and carbon sequestration projects," said Gorder.

Valero expects capital investments in 2022 to come in at about $2 billion, with about 60% of this allocated to sustaining the business and 40% to growth. About half of 2022's growth capital is dedicated to expanding Valero's low-carbon fuels businesses.

Valero reported third-quarter 2022 net income of $2.8 billion, compared with $463 million in the prior-year quarter.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).