Poor margins force closure of Valero’s Delaware refinery

20 November 2009 16:38  [Source: ICIS news]

HOUSTON (ICIS news)--Valero was closing its 210,000 bbl refinery in Delaware City, Delaware, due to poor economic margins, the company said on Friday.

The San Antonio, Texas-based refiner said the decision was “caused by very poor economic conditions, significant capital spending requirements and high operating costs”.

Valero said that it would continue to supply its customers, partially through higher throughput rates at the company’s other refineries.

The company did not specify the exact date of the permanent shutdown and could not be immediately reached for comment.

Earlier this year, the company shut down the gasifier and coking operations at Delaware City, and was seeking a buyer for the refinery, according to the company CEO Bill Klesse.

“At this point, we have exhausted all viable options,” Klesse said.

Valero on Friday notified the refinery’s 550 employees of the shutdown and would immediately begin negotiations with the refinery’s unions regarding the effects of the plant closure, a statement from Valero explained.

Refinery utilisation rates across the US have averaged below 80% during November, as refiners have consolidated operations in an attempt to squeeze profit margins, which have been notably sour for much of 2009.

The shutdown was not a surprise to market players, who felt it was only a matter of time before moribund margins caused some of the bigger refineries to stop running.

“[They were] taking quite a hit on it,” noted a US Gulf coast gasoline trader.

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By: Steven McGinn
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