Valero Energy Corporation
) subsidiary Valero Terminaling and Distribution Co. ("VTDC") and
private Houston industrial developer TGS Development have started
on a new project involving construction of a new marine terminal
near Port Arthur, Texas.
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The 50-50 joint venture between the two companies, known as PI
Dock Facilities LLC, is building a terminal on the lower
Sabine-Neches Waterway with capability of receiving crude oil
tankers up to Suezmax class. The upcoming Marine terminal does
not fall in the ambit of the other terminals in the area that
have daylight restrictions.
The site, earlier used as a dry dock facility with a protected
inlet off the channel, will now have accessibility at any time
and with vessels up to Suezmax class that will reduce crude
delivery costs for Valero. The facility is likely to be
commissioned in the fourth quarter of 2013.
The dock will supply crude oil via a new 36-inch pipeline to
Valero`s Port Arthur Refinery and will have the ease to connect
with other local refineries. The marine terminal site covers an
area exceeding 100 acres, with room for two extra berths
appropriate for LPG and refined product exports or additional
The development of the site will be carried out by TGS
Development LP, while Valero will act as its operator.
) 225,000 barrels per day (bpd) plant and Motiva Enterprises'
600,000 bpd plant are some other refineries in Port Arthur.
Among all the independent refiners, Valero offers the most
diversified refinery base with a capacity of 3.0 million barrels
per day in its 16 refineries located throughout the U.S., Canada
and the Caribbean. More importantly, Valero is best positioned to
profit from increased refining margins mainly on account of its
strategic refinery structure that enables it to use cheaper oil
for over one-half of its needs.
Valero holds a Zacks #3 Rank, which is equivalent to a Hold
rating for a period of one to three months. Longer term, we
maintain our Neutral recommendation.