Houston, 30 April (Argus) — Valero expects to fill its Canadian refinery with North American crudes “within the year or so.”
The first runs this month of US Eagle Ford crude at the 265,000 b/d St Romuald refinery in Quebec, showed encouraging yield, chief executive Bill Klesse said during a morning call with analysts. Up to 90,000 b/d of approved US exports to that refinery, in addition to a reversed Enbridge Line 9 to deliver more inland Canadian light crude, should fill the refinery, he said.
But the US independent refiner did not see similar opportunity for waterborne deliveries on the US west coast. Refineries in California have lagged other regions in accessing new production of cheaper North American crudes. Refining peer Tesoro has moved to take discounted Bakken crude to its California refineries, but Valero maintained today that rail was the cheaper, superior option.
“The cost for the shipping becomes very high,” Klesse said. “We find that taking directly into the refinery, we have as good if not better economics than we would taking it across in a pipe to the west coast and putting it on a US flagged vessel.”
The company continued to engineer projects at its Houston and Corpus Christi, Texas, refineries to increase crude runs. The refineries currently have more cracking capacity than crude distillation capacity — an advantage in expensive crude markets but quickly losing its luster as cheaper crude pours into the Houston area.
Valero reported a $654mn profit in the first quarter of 2013, up from a $432mn loss impaired by the $605mn write down of its Aruba refinery in the same quarter of 2012. A slightly higher throughput of 2.6mn b/d, up 11,000 b/d from the same quarter of 2012, and higher production of more profitable diesel helped produce the profit.
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