By ALISON SIDER
Valero Energy will begin exporting crude oil from Texas to its refinery in Quebec this summer, CEO Bill Klesse told analysts at a conference last week.
"It's flooding the Gulf coast," Mr. Klesse said of light, sweet crude produced at shale formations in the US. Though the infrastructure to transport that crude to coastal refineries has lagged, Mr. Klesse said pipelines are coming online and rail is closing the gap in the mean time.
"So what are we going to do? We're going to take some to Quebec. We already got our license to do that," he said. Mr. Klesse said the company's one-year license will allow it to send 90,000 bpd of crude to Canada.
Under US regulations, a company can obtain a license to export crude oil to Canada for use in that country.
Mr. Klesse said Valero is also making adjustments to its Gulf Coast refineries to allow them to process more light sweet crude, and pushing out medium sour crudes such as those produced in Brazil and the Middle East.
"A couple years ago I never would have said that in one of these meetings, because we wanted to be known as a heavy oil refiner," he said.
Valero spokesman Bill Day wouldn't say how much Texas crude the company will ultimately send to Canada, citing competitive reasons -- the company will still need to buy crude from other sources to meet the 265,000 bpd Quebec refinery's needs. Deliveries are expected to begin this summer.
Mr. Day said this will be Valero's first effort to export crude to Canada. The permit Valero has received allows it to send crude to Canada for one year, but Mr. Day said this could be the beginning of a longer-term venture for the company.
"Assuming this works out the way we expect it to economically, we would foresee renewing the permit," he said.
Dow Jones Newswires