AFPM leaders tout industry progress, Harvey recovery efforts

By ADRIENNE BLUME, Hydrocarbon Processing

Opening Monday morning’s General Session, Valero Energy’s President, Chairman and CEO, Joe Gorder, welcomed attendees to the 116th Annual Meeting. Mr. Gorder opened by saying, “One thing this meeting allows us to do—and that we should do—is take a victory lap. Remembering the good that we do, and how much we help people … [and that] we do all of this while maintaining a strong commitment to the safety of our employees, our businesses and the environment.”

JOE GORDER, President, Chairman and CEO of Valero Energy.
JOE GORDER, President, Chairman and CEO of Valero Energy.

 Overcoming Harvey

Mr. Gorder also spoke to the effects of Hurricane Harvey in August 2017, which caused massive flooding along the Gulf Coast and in southeastern Texas, notably Houston. He noted that many in the room had been impacted by the disaster, including businesses, homes and families. “And yet here we are, standing tall,” he stated.

Gorder also praised the US refining and petrochemical industry for bringing capacity back online in a few short weeks after the hurricane. Approximately 25% of the country’s total refining capacity and approximately 26% of its total petrochemicals capacity were shut down by the storm.

“We always hope for the best but plan for the worst,” Mr. Gorder said. “But we all came together and we helped each other, and I want to thank you for what you did, and for everything that you do.” He also reminded the audience about a second general session, held on Monday afternoon, to address lessons learned from Hurricane Harvey and how the industry can improve in terms of preparedness and recovery.

In closing, the Valero chief said, “My hope is that when you leave this Annual Meeting, you’ll feel good about your contribution to the industry.”

Policy progress

Following Mr. Gorder’s remarks, AFPM President and CEO Chet Thompson addressed attendees. Thompson called the Annual Meeting’s host city, New Orleans, a “shining example of resilience” after Hurricane Katrina, which devastated the city in August 2005.

“Resiliency is something our industry knows a little about, too,” Mr. Thompson said. “Over the years we’ve evolved, we’ve gotten stronger, more productive, more efficient and cleaner, and we will continue to do so.” Mr. Thompson noted that in 2017, US refinery utilization was close to 90% for the third straight year.

Additionally, $25 B of investment was made in the US refining and petrochemicals sector last year, and nearly $150 B of investment are in queue. By 2020, US petrochemical exports are expected to grow by 60%, prompting the AFPM head to note, “The state of the refining and petrochemical industries is strong,” despite the “unprecedented impacts” from Hurricanes Harvey and Irma. “Twenty-four refineries were shut,” Thompson said. “One-fourth of production capacity was down; the whole US supply chain was affected. It had the potential to be catastrophic for our country, for our industry and for consumers, but it wasn’t.” As Mr. Gorder previously noted, within a few weeks, the majority of refining and petrochemicals capacity was returned to operation. “That is the definition of resiliency,” Mr. Thompson said.

The AFPM head then spoke about the state of the US government’s tax reform. “Last year, we thought [tax reform] was a pipe dream, but it wasn’t,” he said. The realized tax reform has enhanced US industry’s ability to invest money in infrastructure and people. “This is where your money needs to go,” Mr. Thompson urged. “Finally, we can look to the government for support, rather than resistance.” He also discussed the “eventual sunset” of Renewable Fuel Standard (RFS) regulations, which he called “bad for industry, consumers and the country.” However, he noted that “productive discussions are happening” to put an eventual end to the subsidies.

The AFPM head also spoke to the need to streamline permit approvals for infrastructure projects, noting, “Reforms do not mean limiting environmental protection.” He also touted AFPM’s support of the North American Free Trade Agreement (NAFTA) between Canada, Mexico and the US. “The bottom line is: NAFTA is working for us,” Mr. Thompson said. “We must stay in the agreement, and we must modernize the energy chapter of the agreement.”

AFPM Leadership Award

Mr. Thompson also presented the first AFPM Leadership Award, given for extraordinary contributions to the advancement of the American fuel and petrochemical industries, to Congressman and Majority Whip Steve Scalise (R-LA). Mr. Scalise, who took the podium to thank AFPM for the award, noted that EPA regulations have affected the industry’s ability to grow, expand and make more jobs. He also touted the current presidential administration for reversing roadblock regulations. “Safety is critical, but when you have regulations that make no sense, they actually do things to decrease your ability to operate safely and hire more people,” Mr. Scalise said. He also noted that the recent tax reforms—the first since 1986—have lowered individual tax rates as well as corporate rates, and have also led some companies to give higher bonuses to employees. “Tax reform has allowed companies to become competitive again,” the Congressman said. “Now, we not only have a stable regulatory climate, but we also have a tax code that works for you.”

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