Valero 2003 Annual Report Download - page 12

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10
top฀rener
Valero’s฀ expertise฀ in฀ expanding฀ and฀ upgrading฀ its฀ reneries,฀ capturing฀ synergies฀ and฀ improving฀
operations฀has฀made฀it฀a฀world-class฀rener.
As฀a฀result฀of฀capital฀improvements฀made฀since฀1996,฀the฀company฀has฀added฀approximately฀250,000฀
BPD฀of฀throughput฀capacity฀–฀the฀size฀of฀a฀world-scale฀renery.฀Valero฀invested฀$400฀million฀in฀these฀
improvements,฀which฀is฀a฀small฀price฀to฀pay฀considering฀that฀it฀would฀cost฀more฀than฀$3฀billion฀to฀
build฀a฀renery฀of฀the฀same฀size฀and฀complexity฀today.
Valero฀ also฀ has฀ continued฀ to฀ make฀ investments฀ to฀ increase฀ its฀ rening฀ system’s฀ complexity฀ and฀
improve฀gross฀margin฀by฀upgrading฀heavier,฀lower-cost฀feedstocks฀that฀are฀also฀lower฀in฀quality฀(e.g.฀
sour฀crude฀oil).฀One฀example฀is฀the฀delayed฀coker฀recently฀constructed฀at฀the฀Texas฀City฀renery.฀Not฀
only฀did฀this฀project฀increase฀the฀throughput฀capacity฀and฀yield฀of฀light฀products,฀it฀enabled฀the฀plant฀
to฀process฀a฀heavier,฀sour฀crude฀oil,฀which฀is฀expected฀to฀lower฀the฀renery’s฀feedstock฀costs฀by฀as฀much฀
as฀$1฀per฀barrel.฀
In฀addition,฀Valero฀has฀captured฀signicant฀synergies฀after฀every฀major฀acquisition฀by฀incorporating฀
these฀reneries฀into฀the฀company’s฀multi-renery฀system.฀Over฀the฀last฀two฀years,฀Valero฀has฀realized฀
more฀than฀$400฀million฀in฀one-time฀and฀recurring฀synergies฀from฀the฀Ultramar฀Diamond฀Shamrock฀
acquisition.฀This฀was฀a฀result฀of฀focusing฀on฀everything฀from฀best฀practices,฀operating฀synergies฀and฀
crude฀sourcing฀to฀energy฀savings฀and฀procurement.฀฀In฀addition,฀the฀recently฀acquired฀St.฀Charles฀and฀
Aruba฀reneries฀present฀Valero฀with฀an฀opportunity฀to฀capture฀signicant฀synergies฀going฀forward.฀
Valero฀ clearly฀has฀ a฀very฀protable฀rening฀system฀because฀of฀ its฀focus฀on฀ rening,฀the฀size฀of฀ its฀
system,฀the฀caliber฀of฀its฀reneries,฀and฀the฀expertise฀of฀its฀employees.
John Hohnholt, Senior Vice President of Technology, Planning & Development, and Rich
Marcogliese, Senior Vice President of Renery Operations, (left to right) work together to
make strategic investments and operational improvements to Valero’s reneries. Valero has
developed one of the largest and most complex rening systems by upgrading the company’s
plants to process sour crude oil, increasing throughput capacities and improving yields.