Valero Energy Corp. has secured a permit from the U.S. Commerce Department to ship crude oil from the Gulf Coast to its plant in Quebec as part of a plan to lower the cost of its feedstock.
Most of the crude will come from South Texas’ Eagle Ford Shale and will displace the light, sweet crude that Valero now buys from Europe and Africa.
Shipping Eagle Ford oil from the Gulf Coast to Valero’s 265,000-barrel-a-day plant near Quebec City will cost about $2 a barrel less than shipping crude across the Atlantic, Valero spokesman Bill Day said.
“The permit would bring additional Eagle Ford crude to Quebec, and there is a lot of Eagle Ford crude,” Day said.
Exporting crude from the United States is prohibited without a Commerce Department permit, Day said. That Valero got the OK “demonstrates the amount of domestic crude that’s produced now.”
A call to the Commerce Department as to the total number of permits issued wasn’t immediately returned.
Valero’s one-year permit was valid starting in November, but the company hasn’t made a major shipment to Quebec yet, Day said.
U.S. crude production gains have mostly come from the Bakken and Eagle Ford shale formations in North Dakota and South Texas, according to Energy Department data.
U.S. crude being shipped to Canada would displace light, sweet oil from West African nations such as Nigeria and Angola, Amrita Sen, chief oil market analyst for Energy Aspects Ltd. in London, told Bloomberg News.
“We’re going to see more volumes shipped to Canada” from the Gulf Coast, Sen said.
Valero’s refineries in Three Rivers, Houston, Corpus Christi and Meraux, La., now process Eagle Ford crude, Day said. Also, the company is shipping about 40,000 barrels a day of Bakken crude to its Memphis refinery by a circuitous route that takes it by rail to Louisiana and then via pipeline to Memphis.
“Even that is less expensive than buying imported crude,” Day said.
Valero also is considering shipping Bakken crude to its California plants, he said.
Bloomberg News contributed to this report.