Valero considering more heavy Canadian crude for refining

San Antonio-based Valero Energy Corp. is mulling a plan to ship more heavy Canadian crude oil to its Wilmington refinery in southern California and to its St. Charles plant in Louisiana.?

A glut of heavy Canadian crude prompted by bottlenecks has depressed its price.

On Thursday, Valero President Joe Gorder said the company is considering shipping by rail 30,000 barrels a day of heavy sour Canadian crude to its 135,000-barrel-a-day Wilmington plant and 25,000 to 30,000 barrels a day of bitumen, a tar-like oil, to its St. Charles plant in Louisiana.

Gorder spoke to analysts at the Bank of America Merrill Lynch Refining Conference. Neither plant would have to be modified to process more of the heavy crude, Valero spokesman Bill Day said.

The Wilmington plant near Los Angeles “is already is set up to handle sour and heavy grades,” Day said. “It now processes a small amount of Canadian crude.”

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The 270,000-barrel-a-day St. Charles plant also processes some Canadian crude that’s shipped in by barge from a delivery point at Hartford, Ill. on TransCanada Corp.’s Keystone pipeline, he said.

Whether Valero goes forward with both plans will depend on the economics of the deals, Day said, “and whether we can find a supply of crude that we can get on a regular basis, and after we put it on rail, will it be at a low enough cost to make it worthwhile.”

Earlier this week, Valero said it hopes to add a $30 million crude oil terminal with rail access at its Benicia refinery in northern California. The addition would allow Valero to transport less expensive domestic crude to the plant.

At present, most of the oil that arrives at the Benicia refinery comes by ship — most of it more costly foreign crude.

Valero officials said North American crude would be much less expensive to ship to Benicia, even with the added cost of shipping by rail.