In the weeks since Hurricane Harvey forced the shut-down of major oil operations along the Gulf Coast, the largest refinery business in the world pumped and delivered oil until its tanks were nearly dry and ran an emergency operations center 24/7 in response.
It was a “pretty brutal” time, said Valero Energy Corporation CEO Joe Gorder at a meeting of the Free Trade Alliance San Antonio’s Women in International Business program Thursday. But he commended Valero workers as well as the State government and Department of Transportation in providing temporary waivers that helped keep the supply moving.
“Our team did an incredible job moving every barrel we had up these pipelines and into the San Antonio market to try to keep people from being inconvenienced by the fuel shortages. And they did a fantastic job,” Gorder said. “We apologize for the inconvenience and we will continue to look for ways to improve as we go forward.”
Also during that period, Valero announced it had signed an agreement with Magellan Pipeline Company to jointly build a 135-mile pipeline from Houston to Hearne, Texas, near Austin. Valero will also build a terminal in Hearne, another in Williamson County, Texas, and an approximately 70-mile, connecting the two. When completed in 2019, the $380 million project will provide a reliable fuel supply alternative for Central Texas.
Another announcement came Thursday that Valero will invest $410 million to expand and develop a marine storage facility that is currently under construction along the Houston Ship Channel in Pasadena, Texas. That facility will handle petroleum products, and provide 5 million barrels of storage, truck loading facilities and two proprietary ship docks.
As the largest refinery business in the world, Valero has 3.1 million barrels-a-day of refining capacity and 7,500 branded outlets from coast to coast. The company also owns 50% interest in a renewable diesel plant near Valero’s St. Charles Refinery in Louisiana, an 11,000 barrel-a-day plant now being expanded to an 18,000 barrel-a-day plant. It owns 11 ethanol plants that produce 91,000 barrels a day.
Worldwide, Valero employs 10,000 people and is listed 32nd of Fortune 500 companies. Gorder was named CEO in May 2014 and chairman of the board in Dec. 2014. Its headquarters are in San Antonio.
He described Valero’s present and future to a room of company executives and local leaders at the inaugural CEO Leadership Luncheon, saying its management team is currently focused on balancing capital growth and rewarding shareholders with maintaining manufacturing excellence and continued investment.
Valero has been increasing its shareholder dividends, from $1.10 a share early in 2015 to $2.80 a share this year, with 440 million shares outstanding. Gorder said Valero’s 2017 capital budget of $2.7 billion is split almost 50-50 between maintenance/reliability and strategic investments, including investment in both logistics and refining.
Even amid a political climate that is considered favorable to business, but also uncertain within an evolving regulatory landscape and global turmoil, Gorder said Valero has “tremendous capacity to increase our export volumes as we move forward.”
In early August, Valero signed an agreement to build and operate a new marine terminal that will allow the company to ship 85,000 barrels a day from the Gulf Coast to Veracruz and move it inland into Mexico City and Puebla. “This is the most significant investment made in volume in Mexico by a U.S. refining company so far,” Gorder said, and the company will continue to grow in that direction. “We will aggressively pursue it.”
He expects the energy sector to be left alone during talk about the North American Free Trade Agreement (NAFTA).
“And I hope that remains true because of all the [energy] trade that takes place between all three of us. Canada is the largest supplier of imported crude to the U.S., and we buy tons of crude from Mexico, and we sell them both products,” Gorder said. “To interfere with that would be a real problem.”
He encouraged business owners to get educated about NAFTA, to do scenario planning to prepare for possible changes to the agreement and, most of all, to get involved.
“Believe me, the one thing I’ve learned from working with our elected officials is grassroots matters,” Gorder said. “Nothing happens there in D.C. It happens from here up. So to the extent you can be aggressive and share your point of view, you’re going to have a much greater impact than letting something percolate from the top and push its way down.”
On Friday, Gorder and the Valero Energy Foundation distributed grants to 121 children’s charities in San Antonio. The funds came from April’s Valero Texas Open that raised a record $11 million for charities across the U.S. where Valero has major operations.