By Phaedra Friend Troy
Following a positive quarterly earnings report, major refiner Valero Energy Corporation (NYSE:VLO) is planning even more capital spending in 2011.
The company plans to invest nearly $3 billion in 2011, an increase in the budget estimate since it was first reported. In 2010, Valero spend some $2.3 billion in capital spending, including monies spent on maintenance and upgrading its plants.
Valero plans to make major reliability investments in two of its US refineries, including a revamp of the cat cracker at its St. Charles Refinery in Louisiana and the replacement of the refinery coke drums at its Port Arthur Refinery in Texas.
Additionally in 2011, the company plans to install new hydrocrackers at the St. Charles and Port Arthur refineries.
“We have advanced the timing on the hydrocracker projects to realize the economic benefits sooner, which capitalize on our outlook for high crude oil and low natural gas prices plus growing global demand for diesel,” said Bill Klesse, Valero CEO. “We will also continue to evaluate opportunities to improve the competitiveness of our portfolio.”
Major Turnaround Activity Planned
The company also plans to perform maintenance turnarounds at six of its refineries during the first and second quarters of 2011.
Those affected include the Benicia Refinery in California, where a plant-wide turnaround is expected to last 42 days starting in January and shutting in 170,000 barrels a day.
Also the Port Arthur Refinery will undergo a turnaround of its crude and coker systems, shutting in 100,000 barrels a day for an estimated 51 days starting in February. The Houston Refinery will undergo a crude turnaround, shutting in 90,000 barrels a day for an estimated 24 days, also starting in February.
In March, Valero plans to perform a turnaround of the MSCC/Alky facilities at its St. Charles Refinery, shutting in 100,000 barrels a day for 56 days. For an estimated 37 days, the company plans a plant-wide turnaround of the Ardmore Refinery in Oklahoma, shutting in 90,000 barrels a day.
In April, Valero plans to perform a HCU turnaround at its McKee Refinery in Texas, which is expected to last 24 days and will shut in30,000 barrels a day.
Notably during the earnings report, Valero revealed that its beleaguered Aruba Refinery, which has been closed since July 2009, was recently restarted and “is continuing to build to planned rates.”
Headquartered in San Antonio, Valero currently operates 13 refineries in the US, Canada and Aruba. The company foresees improving refining margins and crude oil discounts into 2011.
Budget Bump: Valero plans more turnarounds, upgrading projects at US refineries
By Phaedra Friend Troy