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Valero Energy Corporation (NYSE: VLO) is a Fortune 500 international manufacturer and marketer of transportation fuels, other petrochemical products, and power based in San Antonio, Texas, United States.[1] The company owns and operates 15 refineries throughout the United States, Canada, United Kingdom, and the Caribbean with a combined throughput capacity of approximately 2.9 million barrels (460,000 m3) per day, 11 ethanol plants with a combined production capacity of 1.1 billion US gallons (4,200,000 m3) per year, and a 50-megawatt wind farm. Valero is also one of the United States' largest retail operators with approximately 6,800 retail and branded wholesale outlets in the United States, Canada, United Kingdom, and the Caribbean under the Valero, Diamond Shamrock, Shamrock, Ultramar, Beacon, and Texaco brands.[2]
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Valero was created on January 1, 1980, as a spinoff of the Coastal States Gas Corporation. At the time, it was the largest corporate spinoff in U.S. history. Valero took over the natural gas operations of the LoVaca Gathering Company, a defunct subsidiary of Coastal States Gas. The name Valero comes from Misión San Antonio de Valero, better known worldwide as The Alamo.
Valero acquired a small oil refinery in Corpus Christi, Texas in 1981 and began refining operations in 1984.
In 1997, Valero spun off its refinery and retail divisions into a separate company, which kept the Valero name. At the same time, the remaining divisions, which consisted primarily of natural gas operations, were acquired by the Pacific Gas and Electric Company. Later that year, the firm acquired Basis Petroleum, which left it with four refineries in Texas and Louisiana. In 1998, they then acquired a Paulsboro, New Jersey, refinery, the company's first outside of the Gulf Coast area.
In 2000, Valero purchased ExxonMobil's Benicia, California, refinery and interest in 350 Exxon-branded service stations in California, mainly in the San Francisco Bay Area. The company also began retailing gasoline under the Valero brand. In June 2001, the company acquired the Huntway Refining Company, along with two asphalt plants on the West Coast.
On December 31, 2001, Valero completed its acquisition of Ultramar Diamond Shamrock. The merger left Valero with over 4,700 Ultramar, Diamond Shamrock, and Beacon retail sites in the United States, Canada, and the Caribbean. With this acquisition, Valero also received ownership of Shamrock Logistics L.P., which was renamed Valero L.P. In 2006, the division was spun off as NuStar Energy. Starting in 2002, Valero has been expanding its marketing to the East Coast, specifically the Northeast and Florida, using the Valero brand.
On April 25, 2005, Valero agreed to buy Premcor, Inc., for $8 billion in cash and stock to become the largest U.S. refinery, as record prices for gasoline and other fuel boosted profits. On June 30, Valero announced that it was beginning a two-year process of converting Diamond Shamrock stations to the Valero brand. In the next year, on May 5, 2008, the company agreed to buy 72 Albertsons gas stations.
Valero laid off 500 employees at its refinery in Delaware City, Delaware on November 20, 2009, due to profitability concerns. It was reported that the refinery lost $1,000,000 per day since the beginning of the year.
On March 11, 2011, Valero announced that it had agreed to a major European purchase from Chevron Corp. for $730 million in cash, not including working capital that will be determined at closing. Current estimates on the value of working capital would place the total price at $1.73 billion. The acquisition includes Chevron's Pembroke Refinery in Wales — one of Europe's largest and most complex — together with marketing and logistical assets throughout the United Kingdom and Ireland, which include 4 pipelines, 11 terminals, an aviation fuel business, about 1,000 retail outlets, inventory and other items. [3] [4] [5]
The Political Economy Research Institute ranks Valero 28th among corporations emitting airborne pollutants in the United States. The ranking is based on the quantity (3.4 million pounds in 2005) and toxicity of the emissions.[6]
Valero was the biggest[7] financial backer of the failed 2010 California Proposition 23, and contributed more than $4 million by August 2010.[8] Had it passed, Proposition 23 would have delayed action on greenhouse gas emissions in the state of California, by delaying current implementation of the California's Global Warming Solutions Act of 2006 until the state attained an unemployment rate of 5.5% for one full year.[9][10] Critics argued that because that had happened only three times over the last 40 years, the proposition would have had the practical effect of repealing the law.[11][12]
Valero owns two oil refineries in California. The Benicia Refinery is located on the Carquinez Strait, a tributary of the San Francisco Bay. [13] The Wilmington Refinery is located 23 miles (37 km) south of downtown Los Angeles. [14] The top 10 individual sources of California GHG emissions are either oil refineries or power plants. [15]
According to Robert Bryce,[16] author and managing editor of Energy Tribune, Valero Energy Corp. has been awarded multiple multi-million dollar contracts by the U.S. Defense Energy Support Center (DESC) to provide fuel to Israel.
Valero Energy reached an agreement to sell the assets of its terminal operation and discontinued operations in Delaware City to the wholly owned subsidiaries of PBF Energy – Delaware City Refining and Delaware Pipeline – for approximately $220 million in 2010.[17]
Shortly after the divestiture of Delaware City, the company sold its Paulsboro, New Jersey refinery to PBF Energy, as well. The sale concluded Valero's refinery ownership on the East Coast.
On August 1, 2011, Valero acquired the Pembroke Refinery from Chevron, as well as the marketing and logistics assets, for $730 million, excluding working capital valued at approximately $1 billion. The Pembroke plant is one of Western Europe’s largest and most complex refineries with a total throughput capacity of 270,000 barrels (43,000 m3) per day, and a Nelson complexity rating of 11.8. This puts Valero at 15 total refineries and 2.9 million barrels (460,000 m3) per day of throughput capacity overall, solidifying the company’s standing as the world’s largest independent refinery.
In addition to the refinery, Valero also purchased ownership interest in four major pipelines and 11 fuel terminals, and acquired a 14,000-barrel (2,200 m3)-per-day aviation fuels business, and a network of more than 1,000 Texaco-branded wholesale sites, which is the largest branded dealer network in the U.K. and the second-largest in Ireland. Valero is continuing with the Texaco brand in these markets.
Valero retails gasoline branded as Valero, Shamrock, Diamond Shamrock,[18] Ultramar, Beacon, and Total, the last under license from Total S.A.. While this arm of the company is the most visible to the public, it is, according to CEO William R. Klesse, "a very small part of [Valero's] operations".[19]
Valero is attempting to shift its focus from being a discount gasoline brand to becoming a premium brand. As part of that shift, Valero has begun to rebrand its Ultramar, Beacon, Total and Diamond Shamrock stations to the Valero brand. The Beacon and Shamrock brands are used by retailers as a low-cost alternative to the premium Valero brand. The Shamrock brand is based on the former Shamrock Oil and Gas Company, which merged with Diamond Alkali in 1967 to form Diamond Shamrock. The name Ultramar, while being eliminated in the United States, will still be used as Valero's brand name in Canada. Valero introduced its updated "Corner Store" retail concept on December 28, 2007, opening the company's first 5,500-square-foot (510 m2) prototype in western San Antonio.
Valero issues its own private label credit cards for its stations through its credit card-only subsidiary, DSRM National Bank. The initials stand for "Diamond Shamrock Refining & Marketing", the unit of Diamond Shamrock which created it before being purchased by Valero.[20]
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