Despite a shutdown of Delaware refinery because of a sluggish economy and falling demand for fuel, Valero Energy Corp. officials said there are no plans to shutter any of the operating units or the refinery in Texas City. But as it is with all of its facilities, Valero is reviewing its options, a company spokesman said.
The San Antonio-based refiner, which closed another major refinery during the summer, said Friday it would permanently close its Delaware City oil refinery and layoff 550 workers.
It is the largest refinery in the nation to close this year.
Refineries from New Mexico to New Jersey are under severe economic pressure because of falling demand for fuel, with a number of facilities shutting down in recent months.
Refineries in the Northeast are particularly vulnerable because many are older, operate less efficiently and must compete with gasoline imported from Europe.
The Delaware City refinery lost about $1 million every day this year, Valero spokesman Bill Day said.
He would not comment on the profitability of its Texas City refinery but said the company has “no plans to announce any other closures at this time.”
“I can say that the Valero Texas City refinery, like all of Valero’s refineries, is being studied to see if there are areas where we can cut costs and improve profitability,” Day said.
Valero’s 245,000 barrel-per-day Texas City refinery employs about 520 people.
The company did shut down the refinery for more than a month earlier this year for a retooling.
The original plan was to shut down only a part of the refinery for a few months, then after restarting those units, the rest of the refinery would suspend operations for maintenance. Because profit margins for gasoline were plummeting, it was more cost effective to go ahead and overhaul the entire refinery for about 40 days.
The refinery, which went offline in late January, resumed production in March.
Demand for fuel has been falling for some time, and the recession has made things worse, squeezing profit margins for refiners everywhere.
Refiners are pulling capacity offline and now are operating at levels more consistent with the aftermath of a hurricane in the Gulf of Mexico.
El Paso-based Western Refining Inc. announced earlier this month that it would close its Bloomfield, N.M., facility, putting 100 people out of work.
Valero said in September it would idle two units in Delaware City, cutting about 150 jobs. Last month, the company said it would cut another 100 jobs at its Paulsboro, N.J., refinery by the end of the year.
The Paulsboro announcement came just days after Sunoco Inc. said it would indefinitely idle its Eagle Point facility, which employs about 400 workers in New Jersey.
In June, Valero shut its refinery in Aruba, which had a capacity of about 275,000 barrels a day.
The Delaware City refinery had a capacity of 210,000 barrels a day.
Rising gasoline prices already have changed the driving habits of Americans, and the recession has hastened that trend.
About 30 percent of gasoline demand is closely tied to employment, said Ann Kohler, an analyst with Caris & Co.
The nation’s unemployment rate is hovering above 10 percent for the first time in 26 years.
Mainland Editor T.J. Aulds contributed to this report.
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Timeline
• January — Valero shuts down its Texas City refinery for 40 days for a refinerywide retooling. The shutdown, which normally would have been done in phases, was attributed to the slow oil market. The refinery came back online in March.
• March — Valero said it indefinitely shut down a 22,000-barrels-per-day gasoline-making fluid catalytic cracker at Corpus Christi.
• June — Valero shuts down a 20,000 barrels per day coker at its Corpus Christi refinery for economic reasons.
• July — Valero said it has reduced rates of its 480,000 barrels per day coking capacity in its 16-refinery system.
• August — Valero indefinitely shut its 275,000 barrels per day refinery on the Caribbean island of Aruba, which supplied the U.S. market.
• October — Valero shuts down production units at its Delaware City, Del., and Paulsboro, N.J., refineries.
• November — Valero announces it will shut down its Delaware City refinery permanently.
