& Tobago

Very usefull links


News links




Dow Jones

Oil price



Views and News




Refiner Valero Energy looks north to replace Venezuelan heavy crude



By Janet McGurty / Platts


Petroleumworld 02 01 2019

Valero Energy increased the volume of heavy Canadian crude processed in its refining system in the fourth quarter of 2018, including crude arriving by rail, a trend that is likely to continue as recent sanctions cut into shipments from Venezuela.

Valero CEO Joe Gorder said the company needs to replace Venezuelan crude at two of its US Gulf Coast refineries - the 215,000 b/d St. Charles facility in eastern Louisiana and the 335,000 b/d Port Arthur, Texas, complex.

Valero's systemwide heavy crude throughput was 445,000 b/d in Q4 out of 3.0 million b/d overall. About 20% of that was from Venezuela, Gorder said on the Q4 results call.

Valero imported about 50,000 b/d of heavy Canadian crude in October for its USGC system, compared with 126,000 b/d of Venezuelan crude, US Energy Information Administration data showed.

"We did 43,000 b/d of heavy Canadian by rail in Port Arthur [in Q4] and those were very discounted barrels," said Gorder.


However, Western Canadian Select crude prices rose in January, buoyed by provincial production cuts. This was before Venezuelan crude sanctions were instigated, likely cutting the amount of heavy sour crude available for USGC cokers, making the WCS economics slightly less attractive.

So far in January, the price of WCS averaged $42.32/b in Hardisty, compared with a $25.31/b average in Q4, S&P Global Platts price data showed.

As a result, USGC coking margins for WCS have fallen sharply to average $7.29/b so far in January, compared with a $34.59/b average in Q4, Platts margin data showed.

However, they remain more attractive than alternative heavy crudes. The USGC Arab Light coking margin averaged $1.22/b in January while the margin for Mexico's Maya averaged $2.97/b.

Even with rail costs in the mid-to-high teens, WCS coking margins surpass those of the local medium sour grade, Mars, whose coking margin has averaged $4.43/b so far in January.

Platts margin data reflects the difference between a crude's netback and its spot price. Netbacks are based on crude yields, which are calculated by applying Platts product price assessments to yield formulas designed by Turner, Mason & Co..

Valero also ran about 180,000 b/d of heavy Canadian "sourced via pipes into the USGC" on top of the crude-by-rail volumes, Valero head of supply Gary Simmons said on the Q4 call.

"Our view is that crude-by-rail will be necessary until one of the major pipeline projects gets approved out of Western Canada," he added.


Valero is eyeing the reversal of Capline as a means to getting more heavy Canadian crude to its St. Charles refinery in eastern Louisiana.

"We are certainly looking at some of the projects that are out there. Namely the Capline reversal is a potential [option] to be able to get more cost-effective heavy sour crude and St. Charles is a big benefit to our system," Gorder said.

Continued crude-by-rail growth is supported by railroad industry statistics. Data from Canada's National Energy Board show 330,402 b/d of crude was railed across the border in November, up from 148,311 b/d in November 2017.

And data from the Association of American Railroads show carloads of petroleum and petroleum products from Canada averaged 9,697 for the week that ended January 26, up 21.4% year on year.

With Venezuelan barrels expected to back out of the US market, combined with the prospective easing of mandated Canadian production cuts, some transportation companies think the demand could support even more growth in the inland barge market.

"If Venezuela is backing out, we could see more demand for Canadian crude. But that might bring more volumes to the water [that would] come down to the St.Louis area by pipeline and then transfer to barges and then come south," said David Grzebinski, CEO of Kirby Marine on Thursday Q4 earnings call.

Crude barged from the Midwest to the USGC averaged 62,161 b/d in October, EIA data show, compared with 11,741 b/d in October 2017.

"But in general ... we have seen a pickup in the number of barges moving crude. It's not astronomical, but it is more than it was at this time last year for sure," he added.


We invite you to join us as a sponsor.

Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.


By Janet McGurty; Edited by Keiron Greenhalgh from Platts / SPGlobal.

01 31

Hit your target - Advertise with us

PW 300.000 plus request per week

Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions Petroleumworld.com as the source.

Other stories you have to get authorization by its authors. Internet web links to http://www.petroleumworld.com are appreciated.

Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!

We invite all our readers to share with us
their views and comments about this article.


Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1



Contact: editor@petroleumworld.com,

Editor & Publisher: Elio Ohep/
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2019, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2019, Petroleumworld   / Elio Ohep - All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.