By the OGJ Online Staff
HOUSTON, Jan. 10 -- Valero Energy Corp., San Antonio, will upgrade its 220,000 b/d Texas City, Tex., refinery at a cost of $300 million.
The company will build a 45,000 b/d delayed coker facility, which, it said, will improve overall profitability and process heavier, more sour crude.
Completion is expected by January of 2004.
Valero will need the heavy, sour capacity to cope with a new feedstock. The company has entered a long-term supply contract with PMI Comercio Internacional SA de CV, an affiliate of Mexican state company Pemex, for 90,000 b/d of Maya crude, beginning after completion of the coker project.
"Once we complete this project, the Texas City refinery will be a world-class facility with more than 260,000 b/d of throughput capacity," said Bill Greehey, chairman and CEO of Valero. "When we bought the Texas City refinery from Basis Petroleum [Inc.], we paid less than 10¢ on the dollar of replacement cost.
"One of the biggest reasons for the very low purchase price was its limited ability to upgrade bottom-of-the-barrel refined products. The coker project will resolve this limitation by allowing us to upgrade residual fuel oils rather than selling them at discounted prices in the market or transporting them to our Corpus Christi facility.
"The other big benefit is that we'll be able to process a heavier, more sour feedstock slate which should lower the refinery's feedstock costs by as much as $1/bbl."
Greehey said the contract with PMI secures a reliable source of heavy, sour crude that reduces the company's dependency on long-haul crudes like those from the Middle East. Once the contract takes effect, Valero will be purchasing more than 170,000 b/d of PMI crude.
