Valero 2014 Annual Report Download - page 31

29
2014 Summary Annual Report
With terminals at Houston and St. Charles
recently added, VLP is on target to acquire
about $1 billion in assets in 2015.
In all, these and future transactions are
expected to bring an average annual distribution
growth rate of nearly 25 percent over the next
three years.
Nearly all logistics growth investments are
eligible to be dropped into VLP. They are
targeted at enabling Valero to improve the
exibility of its feedstock – from light-sweet
crudes to heavy-sour, depending on the market
– and its ability to export.
Valero has purchased more than 5,000 railcars
and built new crude unloading facilities at
Quebec, St. Charles and Port Arthur. The three
facilities have an estimated total capacity of
150,000 barrels per day.
Valero also is completing tanks at Corpus
Christi to store light, sweet crude oil for
shipment aboard vessels to Valero’s renery in
Quebec.
In all, annual EBITDA from Valero’s current
inventory of logistics assets eligible for VLP is
estimated at $800 million.
If real estate is location, location, location, then
Valero’s strategic mantra well could be logistics,
logistics, logistics.
Valero is securing its ability to move less costly
North American crude oil to its reneries, as
well as high value products to both domestic
and export markets, with pipelines, terminals,
vessels and rail assets.
Valero Energy Partners LP (“VLP”), Valero’s
publicly traded and sponsored master limited
partnership, is the company’s primary vehicle
to grow its logistics business. Valero also is
making investments in railcars, rail unloading
facilities, pipelines, docks and tanks.
The company owns the general partner interest
in VLP, all incentive distribution rights, and an
overall VLP interest of nearly 70 percent.
The high-quality assets are integrated with
Valero’s rening system. VLP was formed in
December 2013 as a public entity and originally
included pipeline and terminal assets serving
the Port Arthur, Memphis, Tenn., and McKee
reneries.
Unlocking considerable value, the growth-
oriented partnership is supported entirely by
reliable, fee-based revenue streams, and aords
access to lower-cost capital.
VLP provides the opportunity for additional
Valero pipeline and terminal operations to be
“dropped” into the partnership. The rst drop
occurred in 2014 with crude systems supporting
the Three Rivers, Ardmore and McKee
reneries.
“We’re focused on unlocking value of the
logistics assets that are owned by Valero by
dropping those assets down to Valero Energy
Partners,” said Rich Lashway, Valero Vice
President-Logistics Operations, and VLP
President and Chief Operating Ocer.
We’re focused on unlocking
value of the logistics assets that
are owned by Valero by dropping
those assets down to Valero
Energy Partners.
Rich Lashway
Valero Vice President-
Logistics Operations,
and VLP President and
Chief Operating Ocer
Focus on Logistics and Creating Value