Valero exploring use of rail to move Canadian crude oil to US Gulf refineries


Valero Energy will spend nearly $1 billion in 2013 to increase the amount of North American crude it can bring to its refineries and how much fuel it can export overseas, company executives said Tuesday.

Valero and other North American refineries have benefited from the dramatic increase in domestic oil production brought about by recent advances in drilling technology and methods.

Domestically produced oil is cheaper than imported crude and gives US refineries a competitive edge when selling their gasoline and diesel to Latin America and Europe.

Refiners still are waiting for new pipelines to be built to connect increasingly productive oil fields to their refineries and leaving them to use rail cars and barges to move the oil. The demand for rail cars and barges is so strong that it can take one year to acquire a new one.

Valero already has expanded greatly how much oil from Texas and North Dakota its Gulf Coast refineries use. The San Antonio, Texas, company, the world's largest independent refiner, now is looking into using rail cars to bring Western Canadian oil to the Gulf Coast, home to about two-thirds of its refining capacity.

"We are looking at our ability to move heavy sour Canadians via rail," said Valero president and chief operating officer Joe Gorder.

Valero also is planning to invest in dock improvements to help boost how much gasoline and diesel it ships. Valero hopes to bring its diesel export capacity to 425,000 bpd from its present 280,000 bpd, Mr. Gorder said.

The logistics projects should be finished by the end of the year, Mr. Gorder said.

Dow Jones Newswires

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