Valero halts two US hydrocracker projects
Valero Energy has suspended plans to add hydrocrackers at two US refineries, citing its agreement to acquire a major
refining interest in the Netherlands.
Valero Chairman and Chief Executive Officer Bill Klesse said the company is "indefinitely postponing our major new
hydrocracker projects at St Charles and Port Arthur."
At the 250,000-bpd Port Arthur, Texas, refinery, Valero had planned to add a 50,000-bpd hydrocracker at an estimated
cost of $ 1.7 bn. The project was expected to add as much as 75,000 bpd of distillation capacity through
debottlenecking.
In a $ 1.25-bn project at the 310,000-bpd St Charles, Louisiana, refinery, Valero planned a new 50,000-bpd
hydrocracker. It had earlier announced delays in both hydrocracker projects.
Klesse linked the postponements to Valero's recent agreement to acquire Dow Chemical's 45 % interest in Total
Raffinaderij Nederland (TRN) for $ 752 mm. TRN owns a 190,000-bpd refinery in Vlissingen with 68,000 bpd of
hydrocracking capacity.
"In the current environment, it makes more sense to acquire existing capacity at a substantial discount to new
construction costs," he said.
In the TRN deal, Klesse said, "We believe the purchase price is less than 50 % of replacement cost for this
world-class distillate hydrocracking facility."
In March, Valero won a bid to buy five ethanol plans plus one under development from bankrupt VeraSun Energy at a
price it estimated to be 30 % of replacement cost. It agreed to pay $ 477 mm for total ethanol production capacity of
780 mm gal/year.
