Valero to ship U.S. crude to its Quebec refinery
Valero Energy Corp has secured U.S. government permission to ship U.S. crude oil to Canada, joining other companies seeking to do the same in light of rising output.
Chief Executive Bill Klesse told analysts last week that Valero has the required license from the U.S. Commerce Department to ship Texas crude from Corpus Christi to its refinery in Quebec City, and aims to do so this summer.
He said Valero’s license allows the company to ship up to 90,000 barrels a day for the year. Valero spokesman Bill Day declined on Tuesday to say specifically when this summer the company would begin those shipments.
Royal Dutch Shell and BP Plc both received similar export licenses last year.
Surging production from U.S. shale and tight oil plays such as the Eagle Ford and Permian Basin in Texas and North Dakota’s Bakken has increased U.S. domestic output to its highest level since 1995.
Some refiners, including Valero, no longer accept light-sweet crude imports at their U.S. Gulf Coast plants because domestic production easily fills that need.
Refiners also are increasingly investing in their plants to be able to run more of that lighter crude.
Klesse told analysts at the Bank of America Merrill Lynch Refining Conference last week that the Gulf Coast is increasingly “flooding” with U.S. output as more pipeline projects come online to move it from Texas plays or the U.S. crude futures benchmark hub in Cushing, Oklahoma.
“There’s so much oil, it’s got to be moving. Our view is it’s flooding the Gulf Coast,” Klesse said. “We’re going to take some to Quebec.”
U.S. law requires companies to get a special license to export U.S. crude oil, and Alaska routinely exports some crude. Shipments to Canada aren’t new either.
Valero’s Quebec refinery now runs imported crude, and provides refined products for Eastern Canada and the U.S. East Coast.