Valero 2010 Annual Report Download - page 16

14 RENEWABLES
With the addition of three ethanol plants in 2010,
Valero now has a total of 10 plants and produces
1.2 billion gallons of ethanol per year.
Under Valero Renewable Fuels Inc. LLC, or Valero
Renewables, the company became the rst
traditional petroleum rener to invest in large-scale
ethanol production. We initially acquired seven
state-of-the-art plants in second-quarter 2009,
located in Albert City, Charles City, Fort Dodge
and Hartley, Iowa; Albion, Nebraska; Aurora, South
Dakota and Welcome, Minnesota. We closed
on the three additional high-quality plants in
Bloomingburg, Ohio; Jeerson, Wisconsin; and
Linden, Indiana, in rst-quarter 2010.
The plants have been protable, posting operating
income of $209 million in 2010, up from $165 million
the year prior. Since the initial acquisition through
the end of 2010, Valero Renewables generated
a total of $373 million in operating income and
$427 million of earnings before interest, taxes,
depreciation and amortization – about 56 percent
of the plants’ total purchase price.
The ethanol business attracted Valero for several
reasons. Valero is in the fuels manufacturing and
distribution business, and is one of the nation’s
largest blenders of ethanol fuel. We were able to
acquire modern, high-performing facilities for less
than half of their replacement cost, and ideally
located in the Midwestern Corn Belt with plentiful
supplies. We retained quality employees, and
have applied our corporate resources and rening
expertise to ethanol operations.
Valero entered ethanol production at the right time,
near the end of a dicult period of overcapacity,
THROUGH STRATEGIC ACQUISITION, VALERO IS NOW ONE OF THE LARGEST ETHANOL
PRODUCERS IN THE UNITED STATES.
PATH TO
EXCELLENCE
Renewables