vest in upgrading its refineries to handle increasing US LTO production,
however, the lifting of the export ban
without the proper economic return
on US crudes from international buyers could disincentivize US refiners
from making investments to accommodate the boom in LTO supplies.
Should the ban on US crude ex-
additional 90,000 b/d and 70,000 b/d,
respectively, according to Day.
The independent refiner also plans
an expansion of the crude unit at its
170,000-b/d McKee, Tex., refinery to
increase throughputs of crude supplies from the nearby Permian basin.
That project, which Valero expects
to be completed by the end of first-quarter 2015, would lift the refinery’s
crude processing capacity to just over
185,000 b/d, Day said.
The planned refinery upgrades
come as part of Valero’s hope to continue maximizing on the benefits of
economically attractive and advantageously located light tight oil (LTO)
production from North American
“These expansions are a long-term
investment in making use of our grow-
ing domestic crude supplies in a way
that makes sense,” Day said. “These
kinds of projects really show that do-
mestic refiners are willing to make the
necessary investments to increase do-
mestic crude processing.”
But with these projects currently
still in the planning phase and the US
Senate Energy and Natural Resources
Committee now examining industry
cries to lift an export ban in place on
what proponents have called a sur-
plus of US domestic LTO supplies mis-
matched for most US refinery config-
urations (OGJ Online, Jan. 30, 2014;
Jan. 8, 2014), nothing is a done deal,
according to Day.
While Valero has expressed its concerns over easing limits on the US
crude oil export embargo (OGJ Online, Jan. 17, 2014), the company is not
the opponent to domestic crude exports that the general media has characterized it to be, Day said.
“Valero actually holds a [crude oil]
export license to export Eagle Ford
crude to our refinery in Quebec, Can-
ada, and it’s been working out quite
well for us,” Day noted. “There are
outlets in North America for the light
crude supply coming from [US] shale
As willing as Valero may be to in-
ports be lifted without those exports
fetching the right price on internation-
al markets, Valero’s planned refinery
upgrades likely would have to be reex-
amined, according to Day.
“We would have to go back to review the economics of the projects to
make sure they still make sense for
us,” Day said.