Valero to Upgrade Texas Refinery

SAN ANTONIO -- Following it $4.2-billion acquisition of San Antonio refiner Ultramar Diamond Shamrock Corp., Valero Energy Corp. said it plans a $300 million upgrade to its Texas City, Texas, refinery that will expand its refining capacity to 260,000 barrels per day in two years.

Valero will add a 45,000 bpd coker unit, which will enable the refinery to process heavier, sulphur-laden crude oil.

"We'll be able to process a heavier, more sour feedstock slate which should lower the refinery's feedstock costs by as much as $1 per barrel," said Bill Greehey, Valero's chairman and chief executive officer.

The company also said it entered into a long-term supply contract with P.M.I. Comercio Internacional, S.A. de C.V., the Mexican state-owned oil company, for 90,000 bpd of Maya crude after the coker is installed. This will raise the company's total commitment with PMI to more than 170,000 bpd of crude oil.

Last month, The San Antonio-based company became the biggest independent refiner in the United States with the Ultramar acquisition.