Valero Energy Corporation · NYSE:VLO
Valero Energy — Corporate Update (July 2007)
36 slides from Valero Energy's corporate update, Jul 6, 2007
Slide 1: Benicia Refinery Tour
Benicia Refinery Tour July 9, 2007
Slide 2: Basics of Refining, Valero Refining System, Benicia Refinery Operations, Plant Tour
Basics of Refining Desulfurization Hydrocracking Valero Refining System Benicia Refinery Operations CARB Gasoline with 10% Ethanol Plant Tour
Slide 3: Rich Marcogliese, Executive Vice President Refining Operations
Rich Marcogliese Executive Vice President Refining Operations
Slide 4: Crudes are classified and priced by density and sulfur content
Crudes are classified and priced by density and sulfur content Crude density is commonly measured by API gravity • API gravity provides a relative measure of crude oil density • The higher the API number, the lighter the crude Light crudes are easier to process Heavy crudes are more difficult to pro
Slide 5: Global crude supply becoming heavier and more sour
Source: Industry reports NOTE: Red line represents the average crude quality by decade (actual and projected) Majority of global reserves are light/medium sour Most quoted benchmark prices are light sweet crudes • WTI (West Texas Intermediate), Western Hemisphere • Brent (North Sea Crude), Europe Hi
Slide 6: Refineries upgrade crude oil to higher value products
Crude TypesCharacteristicsYields 2005 U.S. 3% 34 API GravityProduction Light Sweet Crude30% 0.7 % Sulfur (e.g. WTI, Brent, Saharan Refinery 34% 7% Blend)35% DemandGases Most Expensive33% Gasoline RFG 50% Conventional 3%CARB 24 — 34 API Gravity Medium Sour Crude21%Premium 0.7 % Sulfur (e.g. Mars, Ara
Slide 7: Crude distillation intermediates and final products
IntermediatesFinal Products 90°FPropane, Butane • Refinery fuel gas and lighter • Propane • NGLs 90-220°FStraight Run More Gasoline (low • Gasoline (high octane) octane)processing Crude oil 220-315°FMore • Gasoline (high octane) Naphtha Distillationprocessing • Jet fuel Tower (Crude • Kerosene Unit)
Slide 8: Simple refineries run sweet crude
Crude Unit Propane/Butane4% Propane/ Butane Gasoline Low Octane Gasoline Reformer High Octane Gasoline RFG Tower and Naphtha30% Conventional CARB Hydrogen Premium LightDistillation HS Kerosene/Jet Fuel Distillate LS Kerosene/Jet Fuel Sweet Desulfurizer 34% Distillate CrudeJet Fuel Diesel HS Diesel/H
Slide 9: Crude Atmospheric Tower, Vacuum Tower, Reformer
Crude Atmospheric TowerVacuum TowerReformer
Slide 10: Moderate upgrading capability refineries
Crude Unit Propane/ Propane/Butane8% Butane Gasoline Reformer RFG Low Octane Gasoline High Octane Gasoline45% Conventional and Naphtha CARB Tower Premium Hydrogen Distillate LightDistillation HS Kerosene/Jet FuelLS Kerosene/Jet Fuel Desulfurizer 27% Distillate SourJet Fuel HS Diesel/Heating OilLS Di
Slide 11: Complex refineries run heavier, more sour crudes
Crude Hydrogen Plant Gas Unit Propane/ Propane/Butane7% Butane Gasoline RFG Tower Low Octane Gasoline Reformer High Octane Gasoline58% Conventional and Naphtha CARB Premium Medium/ Distillation Hydrogen Heavy Distillate 28% Distillate HS Kerosene/Jet FuelLS Kerosene/Jet Fuel Sour Desulfurizer Jet Fu
Slide 12: Fluidized Catalytic Cracker, Hydrocracker Reactors
Fluidized Catalytic Cracker Hydrocracker Reactors
Slide 13: Delayed Coker
Delayed Coker Superstructure holds the drill and drill stem Fluid Coker — Benicia while the coke is forming in the drum
Slide 14: Need conversion capacity to capitalize on sour crude discounts
Need conversion capacity to capitalize on sour crude discounts • Hydroskim — Breakeven or moderate margins; High resid yield When margins are positive — increase crude runs When margins are negative — decrease crude runs • Cracking — Better margins; Lower resid yield • Coking — Best margins; Lowest
Slide 15: Desulfurization objective
Objective Remove sulfur from light products (gasoline or diesel) to meet air quality requirements for clean burning fuels
Slide 16: Hydrocracking objective
Objective Value added upgrading of high sulfur distillates to low sulfur gasoline and ultra low sulfur jet/diesel to meet air quality requirements for clean burning fuels
Slide 17: Valero refining system: 3.1 million bpd throughput capacity
Throughput capacities in thousand barrels per day; Excludes 165,000 bpd Lima, Source: Company reports; VLO figures exclude Lima, OH refinery OH refinery 3.1 million barrels per day of High-complexity system and throughput capacityleader in conversion capacity • Scale helps mitigate effect of specifi
Slide 18: Commitment to OSHA Voluntary Protection Program
Continued commitment to OSHA’s Voluntary Protection Program (VPP) • VPP is a recognized OSHA program for excellence in safety • Valero has 11 of only 23 VPP Star Sites in the U.S. New Process Safety Management (PSM) initiative underway • Created VP position in Operations to focus efforts on safety •
Slide 19: Doug Comeau, VP and General Manager Benicia Refinery
Doug Comeau Vice President and General Manager Benicia Refinery
Slide 20: Benicia Refinery history
Built by Exxon in 1969 on the site of the former Benicia Army Arsenal Significant modifications and upgrades have made the refinery one of the most complex and profitable refineries in the United States Valero acquired the refinery in 2000 and has made additional improvements since that time Valero
Slide 21: Aerial View of Benicia
YALERO Aerial View of Benicia MAIN PROCESS AREA \¢ “SOUTHAMPTON!
Slide 22: Benicia Refinery facts
Recognized as an OSHA VPP Star Site September 2006 Total throughput of 170,000 bpd Primary products include “CARBOB” gasoline, diesel, jet fuel, LPG, fuel oil and asphalt High conversion operation 70%+ gasoline yield Located on 425 acres with 475 acre buffer zone Staffed by 480 full-time employees 2
Slide 23: Crude slate and feedstock flexibility
Crude slate includes Alaska North Slope (ANS), San Joaquin Valley (SJV) and a wide variety of other crudes • 80% received by ship across Refinery docks • 20% received by pipeline Shifting crude slate • When acquired in 2000, 80% of Benicia’s crude was ANS • Today, less than 40% ANS Versatile, high-c
Slide 24: Benicia products and distribution
California gasoline — “CARBOB” • 80% CARBOB distributed through pipeline system • 20% finished gasoline blended at Refinery terminal Major supplier of Military jet fuel in northern California (pipeline) Refinery also produces EPA diesel fuel (pipeline) • Ultra Low Sulfur Diesel (ULSD) Unit nearing c
Slide 25: Capital improvements at Benicia
$484 MM invested in capital improvements and $233 MM for turnaround maintenance at Benicia since Valero acquisition Ultra Low Sulfur Diesel Unit (ULSD) — $105 MM Constructing New Crude Tanks (2 — 650 MB) — $60 MM Major plant-wide turnaround completed in 4Q2004 Alky expansion project commissioned in
Slide 26: Valero Improvement Project
Valero Improvement Project (VIP) development under way for 2010 turnaround and beyond • Crude “Sour-up” to reduce dependence on ANS New desalter Sulfur removal and sulfur recovery capacity improvements • Flue gas scrubber for Coker and FCC • New hydrogen manufacturing unit Improved energy efficiency
Slide 27: CARB gasoline with 10% ethanol
Depending on refinery configuration, CARBDepending on refinery configuration, CARB gasoline pool could be reduced by 2% to 4%gasoline pool could be reduced by 2% to 4% net of ethanol net of ethanol Model changes drive increase in ethanol content from 5.7% to 10% by volume Sulfur content must be redu
Slide 28: Appendix
Appendix
Slide 29: Benicia Refinery Flow Diagram
Benicia Refinery Flow Diagram
Slide 30: Slide 30
Slide 31: Separation definition and process
Definition • Separating crude oil into different hydrocarbon groups • The most common means is through distillation Process • Desalting — Prior to distillation, crude oil is often desalted to remove corrosive salts as well as metals and other suspended solids. • Atmospheric Distillation — Used to se
Slide 32: Conversion: cracking definition and process
Definition • “Cracking” or breaking down large, heavy hydrocarbon molecules into smaller hydrocarbon molecules thru application of heat (thermal) or through the use of catalysts Process • Coking — Thermal non-catalytic cracking process that converts low value oils to higher value gasoline, gas oils
Slide 33: Combination and rearrangement definition and process
Definition • Linking two or more hydrocarbon molecules together to form a large molecule (e.g. converting gases to liquids) or rearranging to improve the quality of the molecule Process • Alkylation — Important process to upgrade light olefins to high-value gasoline components. Used to combine small
Slide 34: Treating definition and process
Definition • Processing of petroleum products to remove some of the sulfur, nitrogen, heavy metals, and other impurities Process • Catalytic Hydrotreating, Hydroprocessing, sulfur/metals removal — Used to remove impurities (e.g. sulfur, nitrogen, oxygen and halides) from petroleum fractions. Hydrotr
Slide 35: Glossary of abbreviations
AGO — Atmospheric Gas Oil kVA — Kilovolt Amp ATB — Atmospheric Tower Bottoms LCO — Light Cycle Oil B-B — Butane-Butylene Fraction LGO — Light Gas Oil BBLS — Barrels LPG — Liquefied Petroleum Gas BPD — Barrels Per Day LSD — Low Sulfur Diesel BTX — Benzene, Toluene, Xylene LSR — Light Straight Run (Ga
Slide 36: Forward-looking statements
Statements contained in this presentation that state the Company’s or management’s expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words “believe,”