Valero sees long-term support coming from renewable fuels
US-based fuels supplier Valero Energy reported on April 22 that it took a net loss during the first quarter, but saw long-term strength coming in part from renewable fuels.
The Texas-headquartered company recorded a net loss of $704mn during the first quarter, compared with a year-ago loss of $1.9bn. Valero said the loss included an estimated $579mn loss attributed to Winter Storm Uri, a deep freeze in February that idled large parts of the energy sector along the US Gulf Coast.
By segment, Valero reported its renewable diesel operations realised a $203mn operating income in Q1, a slight improvement over the $198mn reported a year earlier.
Looking ahead, Valero CEO Joe Gorder said he was optimistic about the improvement in demand for petroleum products. For the week ending March 26, near the end of the first quarter, the US Energy Information Administration reported that the total amount of petroleum products supplied to the US market was still lower than levels a year ago, though all of the decline was attributable to jet fuel rather than gasoline or distillates, a product that includes diesel.
“Continued improvement in product demand and refining margins supports a positive outlook for our refining business,” said Gorder. “Those improvements coupled with our growth strategy and operational expertise in low carbon renewable fuels, further strengthens Valero’s long-term competitive advantage.”
Valero said it expected capital investments to come in at $2bn for 2021, of which 60% will go towards sustaining the business and 40% towards growth projects. More than half of that growth capital will be spent on expanding its renewable diesel business.
Moving to another area of the energy transition, Valero and investment firm BlackRock announced last month they would work with midstream services provider Navigator Energy Services to develop a pipeline with various points from Nebraska to Illinois that can capture CO2. Valero would be the primary shipper and secure most of the initial system capacity.
Valero estimates the system will be able to store as much as 5mn mt/yr of CO2 initially, but could ramp up to 8mn mt/yr if the demand is there. Any potential shipper can submit a non-binding expression of interest by April 30.
Valero shareholders took in a net $400mn in dividends during the first quarter.