Valero Energy was not only named after a mission (the Mission San Antonio de Valero), it is on a mission to be the largest independent refiner in the US. Although Phillips 66 is larger by sales, Valero bests that rival by capacity, churning out about 3 million barrels per day. Valero refines low-cost residual oil and heavy crude into cleaner-burning, higher-margin products, including low-sulfur diesels. It operates 16 refineries in the US, Canada, and the UK. It also has 10 ethanol plants. Valero has a network of some 6,800 retail and wholesale gas stations bearing the Corner Store, Diamond Shamrock, Shamrock, Ultramar, Valero, Stop N Go, and Beacon names in 44 US states and in Canada.
Valero is pursuing a long-term strategy of selling about a third of its high-cost North American refineries and other non-core US assets, in order to explore more cost-efficient projects in faster-growing markets in Europe, the Middle East, and Asia. To cut costs, in 2010 it sold its Delaware City refinery. It also sold its Paulsboro, New Jersey refinery that year to PBF Holding for $340 million. It also sold its 50% stake in a pipeline that brings deepwater crude oil from the Gulf of Mexico to the US to Genesis Energy for $330 million.
Hedging its bets, Valero has also moved into the alternative fuel business. Given that ethanol is a requirement in many of the gasoline fuel mixes it sells, the company decided that it could cut costs by owning ethanol plants, rather than buying ethanol wholesale. It made its first foray into ethanol production in 2009, buying seven ethanol production facilities from VeraSun Energy, which was operating under Chapter 11 bankruptcy protection. Valero paid about $475 million for the facilities. After acquiring other ethanol companies, in 2010 the company owned a total of 10 ethanol plants, with a collective capacity of 1.1 billion gallons a year.
Valero also operates a 50-MW, 33-turbine wind farm (completed in 2010) in the Texas Panhandle to provide green energy to its McKee Refinery.
Expanding its global footprint, in 2011 Valero bought Chevron's Pembroke refinery and marketing and logistics assets across the UK for $1.7 billion. It also boosted its US assets that year, buying Murphy Oil's refinery outside New Orleans for $585 million to complement its St. Charles facility.
High oil prices and high refining margins, in addition to the expansion of its operations, helped to lift 2011 revenues by more than 53% and its net income by more than 545%.
Due to the high costs of operating its Aruba refinery, in 2010 Valero announced the suspension of activities at the refinery while it sought alternative uses of the facility. – less