The world's largest independent refiner,
Valero Energy Corporation
) has proposed a $220 million to $280 million project for the
expansion of its Houston refinery. The company also intends to
purchase 2,000 railcars to compensate for a shortage of pipelines
carrying the region's swiftly rising crude supply.
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The company is expected to construct a crude oil topper or
specialized skimming device, which will enable to process more
Eagle Ford crude as well as increase the shipment of crude oil to
inland U.S. locations. The project will help the 90,000
barrels-per-day (bpd) refinery in Houston to boost its gasoline
and diesel yield. The refinery will be connected by the railcars.
The topper, scheduled for completion in the beginning of 2015,
splits crude into parts that are transformed into various fuels.
The plan will assist the company in processing additional and
even lighter crude from the Eagle Ford shale play.
Currently, Valero manages around 140,000 bpd of Eagle Ford crude
in a number of refineries, among which Corpus Christi and Three
Rivers manage around 205,000 bpd and 95,000 bpd, respectively.
Around 40,000 bpd of the North Dakota Bakken crude is processed
at its 180,000 bpd refinery in Memphis, Tennessee. The crude from
the Memphis refinery is carried to the oil hub of St. James,
Louisiana by rail. It is again transferred back north via
Royal Dutch Shell Plc
) Capline pipeline system.
Valero's purchase of railcars will take the company's fleet to
9,000. The lack of pipeline in many areas has driven the refiners
and pipeline companies to increase railcar orders. Last year,
) had also planned to buy 2,000 railcars to enhance access to
Recently, Valero along with private, Houston-based industrial
developer - TGS Development - started on a new project involving
the construction of a new marine terminal near Port Arthur.
) 225,000 bpd plant and Motiva Enterprises' 600,000 bpd plant are
some of the other refineries in Port Arthur.
Valero holds a Zacks Rank #2, which is equivalent to a Buy rating
for a period of one to three months.