November 13, 2007

Valero Energy plans expansion of New Orleans refinery

4,000 jobs during building phase

NEW ORLEANS

Valero Energy Corp. says it will spend US$1.4 billion on a major expansion of its refinery outside of New Orleans that will increase both gasoline and diesel production.

Approval of the plan by Valero’s board was announced by Rich Marcogliese, San Antonio, TX,-based Valero’s chief operations officer, during a call with investment analysts, after the company reported third-quarter earnings.

The expansion at the company’s refinery in Norco, LA, will increase diesel production by 49,000 barrels a day and gasoline production by 11,000 barrels a day. The additional production is expected to start in 2010, Marcogliese said.

Marcogliese said the plan, one of the largest capital projects in Valero’s history, was designed to increase the production of ultra low sulphur diesel fuel to meet new federal environmental standards in the United States.

About 1,500 people will be employed for about two years during constructionand the additional production will add at least 30 permanent jobs to the refinery’s current payroll of 600, Valero spokesman Bill Day said.

Day would not disclose the refinery’s output but said the increase would be significant.

Valero owns and operates 17 refineries in the U.S., Canada and the Caribbean that have a total output of 3.1 million barrels a day. The company also has 5,800 retail and wholesale fuel outlets.

The planned expansion comes as oil prices flirt with the US$100 mark and gas prices are rising. At the pump, the national average price of a gallon of gas rose 1.9 cents from this week, according to AAA and the Oil Price Information Service.

Gasoline prices are up nearly 29 cents since mid-October and are 85 cents higher than a year ago.

Valero’s plan is the second major refinery expansion recently announced in southeastern Louisiana.

Houston-based Marathon Oil Corp. is planning a $3.2 billion expansion of its refinery in Garyville that will increase crude oil refining capacity by 180,000 barrels a day.

Marathon says the refinery will produce 7.5 million additional gallons of fuel daily starting in late 2009 after the expansion is completed.

Marathon believes its project will employ up to 4,000 workers during construction, 200 new employees and 75 to 80 new contract employees.

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