"We had a series of good discussions with EnCana, but at the end of the day, the $2 billion cost to convert our 170,000 barrel-per-day Lima refinery just did not allow for returns that were sufficient to compete with our other strategic investment opportunities," said Valero Chief Operating Officer Bill Klesse. "We have a disciplined approach to ensuring that capital projects and acquisitions meet our financial goals, and we are committed to staying true to that strategy, as it has made Valero the success it is today."
While this specific project didn't meet Valero's financial goals, company officials said they remain committed to investing in the future of the Lima refinery and the community. In fact, over the next five years Valero plans to invest over $400 million in the plant, and increase the refinery's community involvement as well as its civic and charitable contributions.
"We will continue to explore ways to expand and enhance the Lima refinery to secure its bright future as part of Valero," said Klesse.
Valero acquired the Lima refinery and three other plants when it purchased Premcor Inc. on Sept. 1 and the company is still in the process of developing plans to improve the long-term profitability and reliability of these refineries.
Investing in Facilities, Employees, Communities
"Every time we acquire a refinery, we invest more in the facilities, the employees and the communities than the previous owners," said Bill Greehey, Valero Chairman and Chief Executive Officer. "We are following that successful strategy with our newly acquired refineries, and are working to make them leaders in safety, reliability, environmental excellence and community involvement. As a result, this year we expect to donate more than 200,000 volunteer hours and make about $40 million in charitable contributions in the many communities where Valero has business operations.
"In addition, Valero provides some of the best compensation and benefits in the industry and is known for never having a layoff. In fact, Valero has consistently been ranked as one of Fortune magazine's '100 Best Companies to Work For,' ranking No. 3 among large employers and No. 23 overall on the most recent list."
The company has also made safety a top priority. As a result, nine of Valero's refineries have earned Star Site status in OSHA's Voluntary Protection Program (VPP), and a tenth site has been recommended for approval. This program is so stringent that only 19 out of the 149 refineries in the U.S. have achieved this certification.
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