Valero 2005 Annual Report Download - page 15

VA L E R O E N E R G Y C O R P O R AT I O N 13
At Valero, employees’ hands-on
approach to operations was borne out of
necessity in the early years, but has proven to
be the key to profitability.
In the early 1980s, Valero employees trans-
formed two small refining units in Corpus
Christi, Texas, into one of the world’s most
technologically advanced and profitable refin-
eries. In their pursuit to build the refinery
of the future, these employees developed an
expertise in configuring units to run residual
fuel oil – the bottom of the barrel after being
processed by less complex refineries – and
produce premium products. They turned what
some called “garbage” into gold.
Since 1997, Valero has pursued this success-
ful strategy on a much larger scale, earning a
reputation for acquiring distressed refineries
at deep discounts and making strategic invest-
ments to improve their profitability.
As Valero has added 17 refineries to its net-
work, it has attracted some of the world’s
leading refining experts in everything from cat
crackers to coke gasification. Not only have
they spread the Valero spirit at newly acquired
refineries – prioritizing safety, mentoring
employees and sharing best practices – but
they have consistently optimized key units to
maximize profitability.
Their charge has been to ensure that Valero’s
immense 3.3 million-BPD refining system
hums along safely, reliably and efficiently day
in and day out. And their passion has been
to improve yields, increase capacity, capture
synergies, reduce operating costs and configure
plants to process deeply discounted feedstocks.
Of course, the ultimate goal of all of these
strategies is to make the company’s refining
system more profitable.
And they’ve succeeded in a big way!
“The company is the ultimate fixer-
upper, transforming ailing refineries
hemorrhaging money into well-run,
highly profitable operations.”
-- CSP Magazine, January 2006
The nation’s leader in conversion capacity,
Valero is able to upgrade more low-quality
feedstocks into higher-value fuels than its
peers. And as a result of capital investments,
the company has added 533,000 BPD of
throughput capacity – the equivalent of build-
ing three world-scale refineries.
Valero employees’ expertise in expanding,
upgrading and improving operations has con-
tributed to the company’s record success in
Rich Marcogliese, Executive
Vice President – Operations
[left], visits with employee
Steve Brewer about
improvements being made at
the newly acquired Memphis
refinery. Valero’s strategy of
investing to improve yields,
increase capacity, capture
synergies, reduce operating
costs and process less costly
sour feedstocks is key to its
success.
CAT CRACKING
HYDROCRACKING
COKING
MBPD
1600
1400
1200
1000
800
600
400
200
VLO XOM COP RDS BP CVX MRO SUN TSO
0
A LEADER IN UPGRADING CAPACITY
Valero’s upgrading capacity, which is the highest in its peer group, provides
superior operational flexibility. Note: Includes US, Canada & Caribbean
Source: Oil & Gas Journal, Company Web Sites
recent years. In fact, capital projects in 2005
and 2006 are expected to add nearly $200 mil-
lion in operating income this year alone!
Valero has achieved this success by turning
around struggling facilities, like the St. Charles
refinery, which was purchased out of bankrupt-
cy in 2003. After investing time and money
to improve the refinery’s performance in every
area, St. Charles claimed the title of Valero’s
third most profitable refinery in 2005.
There is a similar story at virtually every Valero
refinery. That’s because of the company’s suc-
cessful acquisition strategy, expertise in improv-
ing and upgrading refineries, superior opera-
tional flexibility, synergistic refining system
and focus on safe, reliable and environmentally
sound operations.
But the No. 1 reason for Valero’s success: its
dedicated and hard-working employees know
the refining business like the back of their hands!