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

PBF Energy, PBF Logistics make management changes

12/12/2014 Matthew Lucey, currently executive vice-president of PBF Energy Inc., will succeed Michael Gayda as the company’s president. Todd O’Malley, current...

Repairs under way at ORPIC’s Muscat refinery

12/11/2014 Oman Oil Refineries & Petroleum Industries Co. (ORPIC) said it plans to resume operations at its 106,000-b/d Mina Al Fahal refinery near Muscat...

Phillips 66 advances plans for splitter at Sweeny refinery

12/11/2014 Phillips 66 has filed an application with state regulators for a permit to build a condensate splitter at its 247,000-b/d Sweeny refinery in Old Oc...

Samref wraps Yanbu refinery revamp

12/11/2014 Saudi Aramco-Mobil Refinery Co. Ltd. (Samref), a 50-50 joint venture of Saudi Aramco and ExxonMobil Corp. subsidiary Mobil Yanbu Refining Co. Inc.,...

BPCL adds petrochemicals to Kochi refinery expansion

12/09/2014 Bharat Petroleum Corp. Ltd. (BPCL), Mumbai, plans to diversify into petrochemicals production as part of the ongoing integrated expansion and upgra...

Moody's: E&P spending to dip as crude oil prices slide

12/08/2014 Weakening crude oil prices will cut exploration and production spending by independent producers in the US next year and make integrated oil and ga...

Firms' third-quarter earnings climbed amid lower crude oil prices

12/08/2014 A sample of 58 oil and gas producers and refiners based in the US recorded a combined 38% jump in profits for this year's third quarter compared wi...

Reliance expands desalination plant at Jamnagar refinery

12/05/2014 Reliance Industries Ltd. (RIL), Mumbai, is scheduled to receive proprietary PX technology from Energy Recovery Inc., San Leandro, Calif., as part o...

Start-up continues at Abreu e Lima refinery

12/05/2014 Petroleo Brasileiro SA (Petrobras) has initiated the start-up of furnaces in the atmospheric distillation unit at its Abreu e Lima refinery (Rnest)...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


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