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Released April 27, 2022 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--The past few months have been a good time to be a refiner in the U.S. While U.S. oil production has flatlined, demand for refined products is near pre-pandemic levels, resulting in higher prices and good margins. Valero Energy Corporation's (NYSE:VLO) (San Antonio, Texas) recently reported first-quarter 2022 earnings show this, particularly in its Refining segment.
In a Tuesday earnings conference call, Valero Chief Executive Officer Joe Gorder discussed the company's performance. "Refining margins were supported by strong product demand, coupled with very low product inventories globally. Refinery capacity rationalizations that have taken place in the last couple of years continue to contribute to the supply tightness," said Gorder. Refinery throughput volumes averaged 2.8 million barrels per day (BBL/d), which was 390,000 BBL/d higher than first-quarter 2021. Valero reported $1.45 billion in operating income for its Refining segment in the just-passed quarter, compared with an operating loss of $592 million in first-quarter 2021.
And the company is looking to further increase its profitability through capital projects at its refineries, notably a delayed coker unit addition at its 395,000-BBL/d refinery in Port Arthur, Texas, construction of which has been underway since 2019. Gorder said the coker project, which is expected to increase the refinery's utilization rate and improve turnaround efficiency, is expected to be completed in the first half of 2023. Subscribers to Industrial Info's Global Market Intelligence (GMI) Refining Project Database can click here for the detailed report.
While the company's Refining segment shone brightly in the first quarter, its low-carbon fuels segments, Renewable Diesel and Ethanol, didn't fare as well, although the Ethanol segment did show improvement, reporting $1 million in operating income, compared to a $56 million loss in the prior-year quarter. Gorder said the Ethanol segment suffered from weak margins. Valero's ethanol production averaged 4 million gallons per day in first-quarter 2022, an increase of 483,000 gallons per day from first-quarter 2021.
Valero is aiming to improve its ethanol margins by being a shipper on Navigator Energy Services LLC's (Dallas, Texas) carbon capture and sequestration project in the U.S. Midwest and Great Lakes regions. Gorder said the project is expected to begin startup activities in late 2024. "Valero is expected to be the anchor shipper, with eight ethanol plants connected to this system, which should provide a lower carbon-intensity ethanol product and result in high product margins," he said. Subscribers to Industrial Info's Pipelines and Terminals Project Databases can click here for related project reports.
Valero's Renewable Diesel segment showed lower operating income, dipping from $203 million in first-quarter 2021 to $149 million for the recently passed quarter. In late 2021, Valero completed an expansion of its Diamond Green Diesel (DGD) plant in Norco, Louisiana, which helped boost its renewable diesel production to 1.7 million gallons per day, which was 871,000 gallons per day higher than first-quarter 2021. Subscribers to Industrial Info's Alternative Fuels Project Database can click here for the report.
Valero's renewable diesel production capacity will again increase with its DGD3 renewable diesel project in Port Arthur, which is now expected to be completed in the fourth quarter of this year. Gorder said, "With the completion of this 470 million-gallon-per-year plant, DGD's total annual capacity is expected to be approximately 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha." Subscribers can click here for the report.
As its existing projects unfold, Valero is keeping an eye on further opportunities. "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 executives expect the company's capital investments to be approximately $2 billion in 2022, about 60% of which will be allocated to sustaining the business and 40% to growth.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
In a Tuesday earnings conference call, Valero Chief Executive Officer Joe Gorder discussed the company's performance. "Refining margins were supported by strong product demand, coupled with very low product inventories globally. Refinery capacity rationalizations that have taken place in the last couple of years continue to contribute to the supply tightness," said Gorder. Refinery throughput volumes averaged 2.8 million barrels per day (BBL/d), which was 390,000 BBL/d higher than first-quarter 2021. Valero reported $1.45 billion in operating income for its Refining segment in the just-passed quarter, compared with an operating loss of $592 million in first-quarter 2021.
And the company is looking to further increase its profitability through capital projects at its refineries, notably a delayed coker unit addition at its 395,000-BBL/d refinery in Port Arthur, Texas, construction of which has been underway since 2019. Gorder said the coker project, which is expected to increase the refinery's utilization rate and improve turnaround efficiency, is expected to be completed in the first half of 2023. Subscribers to Industrial Info's Global Market Intelligence (GMI) Refining Project Database can click here for the detailed report.
While the company's Refining segment shone brightly in the first quarter, its low-carbon fuels segments, Renewable Diesel and Ethanol, didn't fare as well, although the Ethanol segment did show improvement, reporting $1 million in operating income, compared to a $56 million loss in the prior-year quarter. Gorder said the Ethanol segment suffered from weak margins. Valero's ethanol production averaged 4 million gallons per day in first-quarter 2022, an increase of 483,000 gallons per day from first-quarter 2021.
Valero is aiming to improve its ethanol margins by being a shipper on Navigator Energy Services LLC's (Dallas, Texas) carbon capture and sequestration project in the U.S. Midwest and Great Lakes regions. Gorder said the project is expected to begin startup activities in late 2024. "Valero is expected to be the anchor shipper, with eight ethanol plants connected to this system, which should provide a lower carbon-intensity ethanol product and result in high product margins," he said. Subscribers to Industrial Info's Pipelines and Terminals Project Databases can click here for related project reports.
Valero's Renewable Diesel segment showed lower operating income, dipping from $203 million in first-quarter 2021 to $149 million for the recently passed quarter. In late 2021, Valero completed an expansion of its Diamond Green Diesel (DGD) plant in Norco, Louisiana, which helped boost its renewable diesel production to 1.7 million gallons per day, which was 871,000 gallons per day higher than first-quarter 2021. Subscribers to Industrial Info's Alternative Fuels Project Database can click here for the report.
Valero's renewable diesel production capacity will again increase with its DGD3 renewable diesel project in Port Arthur, which is now expected to be completed in the fourth quarter of this year. Gorder said, "With the completion of this 470 million-gallon-per-year plant, DGD's total annual capacity is expected to be approximately 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha." Subscribers can click here for the report.
As its existing projects unfold, Valero is keeping an eye on further opportunities. "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 executives expect the company's capital investments to be approximately $2 billion in 2022, about 60% of which will be allocated to sustaining the business and 40% to growth.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
