We welcome you to JobBank USA and hope your job hunting experience
is a pleasant one. We hope you find our resources useful.
September 8, 2009
NEW YORK - Valero Energy Corp (VLO.N) will sack hundreds of workers and idle several major processing units slammed by slumping fuel demand in the recession, the largest U.S. refiner said on Tuesday.
The move reflects a change in fortunes for an industry that only a few years ago was reaping record profits during a period seen as a golden age of refining.
Valero said it intends to shut the coker unit and gasifier complex at its Delaware City, Delaware, refinery and keep a gasoline-making FCC unit and a coker idled indefinitely at its Corpus Christi, Texas, refinery, all for economic reasons.
The plant-wide shutdown of the 275,000-bpd Aruba refinery is now expected to be for an extended period, San Antonio, Texas-based Valero added in a statement.
Market watchers keep a close eye on Valero, which has 16 refineries and about 3 million barrels per day (bpd) in processing capacity, as the refining industry's bellwether.
"These moves, while difficult, are necessary to improve the profitability of Valero's refining system," said Valero Chairman and CEO Bill Klesse, noting the Aruba decision will lead to a substantial cut in its operating expenses.
Shutting down the coker and the gasifier at Delaware City "will reduce costs, improve reliability, and allow the refinery to run a lighter crude slate and shift production to higher-margin products," Klesse added.
Mark Gilman, an oil analyst with the Benchmark Company in New York, said profits for coking operations have been virtually nonexistent.
"To operate these units at low utilization rates or even shut them down altogether for some time is not an ill-advised or terribly surprising decision," Gilman told Reuters.
Asked about the timing of the Delaware shutdowns, Valero spokesman Bill Day said the refinery plans to shut the gasifier by the end of September and a coker unit by early October.
"Both have been unprofitable for quite some time," Day told Reuters. "Each one has been a drag on profitability both at the refinery and throughout the Valero system."
These decisions will reduce headcount at the 210,000-bpd Delaware City refinery by at least 150 employees and 100 contract workers, the company said in its statement earlier.
DISTILLATES GLUT WEIGHS ON MARGINS
The coker is likely to be idle at least until the outlook for coking economics improves, he said, while the gasifier outage may be more permanent as it costs less to buy natural gas than use the synthetic gas it makes from petroleum coke.
"The coker will not be restarted until coking margins improve," Day said.
"No one really knows when coking margins will improve, that will depend on the economy rebounding and it will depend on the differential between light sweet crude and heavy sour crude," the spokesman said.
"With the gasifier we are not sure that its economics will improve," Day said.
Meanwhile, economic shutdowns of a gasoline-making fluid catalytic cracker unit and a coker unit at the east plant of Valero's 340,000-bpd Corpus Christi, Texas, refinery will continue indefinitely, Day added.
"Coker economics are poor ... they will, over time, get better, but when you have a distillate inventory picture on a global basis such as we have right now, it isn't going to get better soon even if you get an economic recovery and demand starts to look a little bit better," Gilman said.
"We've got a glut of middle distillates that is going to take quite some time to work it's way off and until that happens your coker economics probably aren't going to get a lot better," Gilman added.
Shares in Valero ended 2.12 percent higher at $18.75 on the New York Stock Exchange on Tuesday, compared with 52-week highs and lows at $36.22 and $13.94, respectively.
(Additional reporting by Rebekah Kebede and Richard Valdmanis)
Email This Page!