Another Refinery To Be Closed

abarrelfullabarrelfull wrote on 19 Mar 2012 13:14
Tags: aruba refinery valero

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Its not much of a surprise, but Valero announced today that they were to mothball the Aruba Refinery. The refinery was previously mothballed in 2009, and had been struggling.

The refinery has been operating at reduced rates because of inadequate margins resulting in financial losses.

It could now go the way of the St Croix Refinery which announced its closure recently

Valero has thoroughly evaluated all of its alternatives for the refinery and is now considering the possibility of operating a terminal and storage operation at the site.

Interestingly one of the disadvantages that Hovensa mentioned was the cost of energy

In addition, the low price of natural gas in the United States has put HOVENSA, an oil-fueled refinery, at a competitive disadvantage

Now this is interesting because Valero had proposed a solution to this problem for its Aruba Refinery.

Valero Aruba Refinery and the Government of Aruba announced today that they had signed a memorandum of understanding addressing the delivery of a liquefied natural gas to Aruba

Unfortunately without its key customer, the Aruba LNG Terminal is probably not going to get built.

As I have stated previously cost structure is key to refinery profitability, and US refineries continue to enjoy a massive energy cost advantage.

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