Valero Energy Corporation (Valero)

Valero Energy Corporation (Valero)

 

Valero Energy Corporation (Valero), incorporated in 1981, owns and operates 18 refineries located in the United States, Canada, and Aruba that produce refined products, such as reformulated gasoline blendstock for oxygenate blending (RBOB), gasoline meeting the specifications of the California Air Resources Board (CARB), CARB diesel fuel, low-sulfur and ultra-low-sulfur diesel fuel, and oxygenates (liquid hydrocarbon compounds containing oxygen). The Company also produces conventional gasolines, distillates, jet fuel, asphalt, petrochemicals, lubricants and other refined products. Valero markets branded and unbranded refined products on a wholesale basis in the United States and Canada through a bulk and rack marketing network. It also sells refined products through a network of approximately 5,800 retail and wholesale branded outlets in the United States, Canada and Aruba. During the year ended December 31, 2006, Valero sold all of its ownership interest in Valero GP Holdings, LLC. In July 2007, the Company completed the sale of the Lima, Ohio refinery to Husky Energy Inc.

 

The Company's business is organized into two segments: refining and retail. Its refining segment includes refining operations, wholesale marketing, product supply and distribution, and transportation operations. The refining segment is segregated geographically into the Gulf Coast, Mid-Continent, West Coast and Northeast regions. Valero's retail segment includes Company-operated convenience stores, Canadian dealers/jobbers, truckstop facilities, cardlock facilities and home heating oil operations. The retail segment is segregated into two geographic regions. The Company's retail operations in eastern Canada are referred to as Retail-Canada. Its retail operations in the United States are referred to as Retail-U.S.

 

Refining

 

On December 31, 2006, Valero's refining operations included 18 refineries in the United States, Canada and Aruba with a combined total throughput capacity of approximately 3.3 million barrels per day (BPD). The Company's Corpus Christi East and West Refineries are located along the Corpus Christi Ship Channel on the Texas Gulf Coast. The West Refinery specializes in processing primarily sour crude oil and resid into premium products, such as RBOB. The East Refinery processes heavy, high-sulfur crude oil into conventional gasoline, diesel, jet fuel, asphalt, aromatics, and other light products. Its Port Arthur Refinery is located on the Texas Gulf Coast approximately 90 miles east of Houston. The refinery processes primarily heavy sour crude oils and other feedstocks into conventional and premium gasoline and RBOB, as well as diesel, jet fuel, petrochemicals, petroleum coke and sulfur.

 

The Company's Aruba Refinery is located on the island of Aruba in the Caribbean Sea. It processes primarily heavy sour crude oil and produces primarily intermediate feedstocks and finished distillate products. Its St. Charles Refinery is located approximately 15 miles from New Orleans along the Mississippi River. The refinery processes sour crude oils and other feedstocks into gasoline, distillates and other light products. Valero's Texas City Refinery is located southeast of Houston on the Texas City Ship Channel. The refinery processes primarily heavy sour crude oils into a slate of products. Its Houston Refinery is located on the Houston Ship Channel. It processes primarily sour crude oils and low-sulfur resid into conventional gasoline and distillates. The refinery also produces roofing-grade asphalt. Valero's Three Rivers Refinery is located in South Texas between Corpus Christi and San Antonio. It processes primarily heavy sweet and sour crude oils into conventional gasoline and distillates. The refinery has access to crude oil from foreign sources delivered to the Texas Gulf Coast at Corpus Christi, as well as crude oil from domestic sources through third-party pipelines. The Company's Krotz Springs Refinery is located between Baton Rouge and Lafayette, Louisiana on the Atchafalaya River. It processes light sweet crude oils (received by pipeline and barge) into conventional gasoline and distillates.

 

Valero's Benicia Refinery is located northeast of San Francisco on the Carquinez Straits of San Francisco Bay. It processes sour crude oils into premium products, primarily CARBOB gasoline. (CARBOB is a reformulated gasoline mixture that meets the specifications of the California Air Resources Board when blended with ethanol.) Its Wilmington Refinery is located near Los Angeles, California. The refinery processes a blend of heavy and high-sulfur crude oils. The refinery can produce all of its gasoline as CARBOB gasoline and produces both ultra-low-sulfur diesel and CARB diesel. The refinery is connected by pipeline to marine terminals and associated dock facilities that can move and store crude oil and other feedstocks. Refined products are distributed via the Kinder Morgan pipeline system and various third-party terminals in southern California, Nevada, and Arizona.

 

The Company's Memphis Refinery is located in Tennessee along the Mississippi River's Lake McKellar. It processes primarily light sweet crude oils. Almost all of its production is light products, including regular and premium gasoline, diesel, jet fuels, and petrochemicals. Valero's McKee Refinery is located in the Texas Panhandle. It processes primarily sweet crude oils and produces conventional gasoline, RBOB, low-sulfur diesel, jet fuels and asphalt. The refinery has access to crude oil from Texas, Oklahoma, Kansas and Colorado through third-party pipelines. The Company's Lima Refinery is located in Ohio between Toledo and Dayton. It processes primarily light sweet crude oils. The refinery produces conventional gasoline, RBOB, diesel, jet fuels and petrochemicals. Valero's Ardmore Refinery is located in Ardmore, Oklahoma, approximately 90 miles from Oklahoma City. It processes medium sour and light sweet crude oils into conventional gasoline, low-sulfur diesel and asphalt.

 

Valero's Quebec City Refinery is located in Levis, Canada. It processes sweet crude oils, sweet acidic crude oils into conventional gasoline, low-sulfur diesel, jet fuels, heating oil and propane. The refinery receives crude oil by ship at its deepwater dock on the St. Lawrence River. The Company's Delaware City Refinery is located along the Delaware River near Wilmington, Delaware. The refinery processes primarily sour crude oils into a slate of products, including conventional gasoline, RBOB, petroleum coke, sulfur, low-sulfur diesel and home heating oil. Its Paulsboro Refinery is located in Paulsboro, New Jersey, approximately 15 miles south of Philadelphia on the Delaware River. The refinery processes primarily sour crude oils into a slate of products, including gasoline, distillates, lube oil basestocks, asphalt, petroleum coke, sulfur and fuel oil.

 

Retail

 

The Company's retail segment operations include sales of transportation fuels at retail stores and unattended self-service cardlocks; sales of convenience store merchandise in retail stores, and sales of home heating oil to residential customers. Valero is an independent retailer of refined products in the central and southwest United States and eastern Canada. The Company's retail operations are supported by its credit card program, which had approximately 700,000 accounts as of December 31, 2006. Its retail operations are segregated geographically into two groups: Retail-U.S. and Retail-Canada.

 

Sales in Retail-U.S. represent sales of transportation fuels and convenience store merchandise through Valero's Company-operated retail sites. During 2006, total sales of refined products through Retail-U.S.'s retail sites averaged approximately 116,600 BPD. In addition to transportation fuels, its Company-operated convenience stores sell snacks, candy, beer, fast foods, cigarettes and fountain drinks. On December 31, 2006, the Company had 967 Company-operated sites in Retail-U.S. (of which approximately 75% were owned and 25% were leased). Its Company-operated stores are operated primarily under the brand names Corner Store and Stop N Go. Transportation fuels sold in Valero's Retail-U.S . stores are sold primarily under the Valero brand, with some sites selling under the Diamond Shamrock brand pending their conversion to the Valero brand.

Sales in Retail-Canada include the sales of refined products and convenience store merchandise through its Company-operated retail sites and cardlocks; sales of refined products through sites owned by independent dealers and jobbers, and sales of home heating oil to residential customers. Retail-Canada includes retail operations in eastern Canada, where Valero is a supplier of refined products serving Quebec, Ontario, and the Atlantic Provinces of Newfoundland, Nova Scotia, New Brunswick, and Prince Edward Island. During 2006, total retail sales of refined products through Retail-Canada averaged approximately 75,600 BPD. Transportation fuels are sold under the Ultramar brand through a network of 956 outlets throughout eastern Canada. On December 31, 2006, the Company owned or leased 446 retail stores in Retail-Canada and distributed gasoline to 510 dealers and independent jobbers. In addition, Retail-Canada operates 89 cardlocks, which are card- or key-activated, self-service, unattended stations that allow commercial, trucking and governmental fleets to buy transportation fuel 24 hours a day. Retail-Canada operations also include a home heating oil business that provides home heating oil to approximately 151,000 households in eastern Canada.