Valero getting into renewables via wind, ethanol

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, July 13 -- Valero Energy Corp. is getting into renewables, having bought several ethanol plants earlier this year and having built a wind farm in West Texas near its McKee refinery. The wind farm is scheduled to operate at full capacity in August.

Valero, San Antonio, expects to generate 50 Mw/hr of electricity when the wind is blowing around Sunray, Tex., which will be enough to run the refinery 40 miles north of Amarillo.

The wind farm, consisting of 33 wind turbines at the 166,600 b/cd Sunray refinery, cost $115 million, said Valero spokesman Bill Day.

It’s hard to know when the turbines will pay for themselves because they’re compared against the cost of electricity generated with natural gas, and natural gas costs fluctuate significantly.

“We built the wind farm there because we had plenty of open space around the refinery. We own the land,” Day said. “It’s relatively inexpensive over the long term.” He noted that the refinery will remain reliant on the electricity grid when the wind is not blowing.

In March, Valero announced plans to buy seven ethanol plants from VeraSun Energy for $477 million. The sale was approved by a Delaware bankruptcy judge. VeraSun of Sioux Falls, SD, filed for Chapter 11 bankruptcy protection in October 2008.

The refiner is open to possibly buying more ethanol plants, Day said, adding that the company “got the best that was available at that time. These ethanol plants were available at 30% of what it would have cost to build them.” Valero operates the ethanol plants under a subsidiary.

Valero formed a group in 2008 called the Alternative Energy & Project Development Group, headed by Jim Gillingham, a senior vice-president, who has been plant manager at some of Valero’s largest refineries.

AEPD has been making small investments in biofuels companies that are working on technologies like producing cellulosic ethanol, making fuel from landfill waste, and making biofuels from algae.

Although the greatest percentage of Valero’s revenues will continue to come from the refining and marketing side of the business, alternative energy is growing rapidly and is becoming an important part of Valero’s business.

Expanding the value chain
Deloitte LLP recently issued a report recommending that refiners capture more of the emerging value chain for transportation fuels (OGJ Online, July 10, 2009).

Roger Ihne, a principal with Deloitte in Houston, said US refining margins are likely to shrink given anticipated stricter fuel standards and rising mandates for blending ethanol. Valero agrees with this scenario, Day said.

The US renwable fuel standard calls for 11.1 billion gal of renewable fuel to be blended into gasoline this year, escalating to 36 billion gal by 2022.

“Although somewhat ironic, refiners can leverage their operations experience and capital to embrace the regulations designed to significantly reduce the consumption of traditional transportation fuels,” Ihne said in a study entitled, “A Tsunami of Change Bearing Down on the Refining Industry.”

Nothing that regulatory changes can provide business opportunities, Ihne said Valero is an example of a traditional refiner that is positioning itself into the emerging fuels market.

Contact Paula Dittrick at paulad@ogjonline.com.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...
White Papers

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected