Valero 2005 Annual Report Download - page 11

VA L E R O E N E R G Y C O R P O R AT I O N 9
Valero employees have had their
hands full literally and figuratively during the
past eight years.
The company began aggressively acquiring
refining assets in 1997 because Valero leaders
foresaw that the worldwide movement toward
cleaner fuels would tighten refined prod-
uct supplies – making refineries and refined
products significantly more profitable. They
also predicted that the future would belong
to those refiners that could process cheaper,
heavier and more sour feedstocks into pre-
mium products.
As they noted in the company’s 1996 annual
report, “The ability to visualize a changing
future is what separates tomorrow’s success
story from today’s competition.”
That certainly has proven true for Valero!
The company has experienced unprecedented
success because its leaders not only saw this
unique opportunity, they seized it!
Valero has implemented a winning strategy of
acquiring assets for a fraction of their replace-
ment cost and investing in them to improve
operations and enable them to process less
costly feedstocks.
The company’s steadfast pursuit of refineries
that meet its acquisition criteria – capacity in
excess of 100,000 BPD, upgrade potential,
good supply logistics and synergies with its
system – has led to record success.
Valero has gone from one refinery with
170,000 BPD of capacity to 18 plants with
3.3 million BPD of capacity. But the real tes-
tament to its success has been the 10 consecu-
tive quarters that Valero has achieved record
earnings.
“He kind of built a jigsaw puzzle and all of
a sudden it became so clear, I said, ‘My
God, this actually looks a lot better than
many people think.’ ... He was right. He
was absolutely right.”
-- Fadel Gheit, Wall Street analyst quoted
by the Associated Press about the logic of
Bill Greehey’s huge bet on refining,
January 2006
2005 was a capstone to the past eight years
of unprecedented growth and success, as the
Premcor acquisition catapulted Valero to
become the No. 1 refiner in North America.
As part of Valero’s senior
management team, Mike
Ciskowski, Executive Vice
President & Chief Financial
Officer [left], and Gene
Edwards, Executive Vice
President - Corporate
Development & Strategic
Planning, have helped make
Valero the No. 1 refiner in
North America through
strategic acquisitions and
capital improvements.
3.3 Million BPD
170,000 BPD
Houston
Krotz Springs
Texas City
2002
1997
1996 1998 1999 2000 2001
Paulsboro Benicia Corpus
Christi
East
&
Huntway
UDS
Ardmore
Denver*
McKee
Quebec
Three Rivers
Wilmington
2003
St. Charles
2004 2005
Aruba
Premcor
Inc.
Delaware City
Lima
Memphis
Port Arthur
Basis
Petroleum
Inc.
*De n v e r refi n e ry was d iveste d i n 2005 .
VALERO’S RISE TO NO. 1
FROM 17 0,00 0 BP D TO 3.3 MILL ION BPD