Thursday, August 27, 2009

Refinery Closure - Aruba

Advisory: this may be a communication under the laws that regulate attorneys, and a solicitation for legal services.

Valero announced the permanent closure of their refinery on the island of Aruba, near Venezuela in the Caribbean. Only a few years ago, that refinery along with all the others in the U.S. and Caribbean were running full out. Meanwhile, more cars are on the roads, which should have increased gasoline and diesel demand. But, apparently not enough to keep the refinery running.
Other U.S. refineries are running at greatly reduced rates, with the latest overall number from the EIA showing 84 percent of capacity. Also, the Marathon refinery expansion in Louisiana is on schedule for startup in 4Q 2009, which will add about 1 percent to the U.S. total refining capacity. If it is started up, others much reduce their rates to maintain supply and demand in balance.

My estimation is for refining rates to reduce to the low 80's, perhaps 81 or 82 percent. School starting and vacations ending have historically resulted in less gasoline sales after Labor Day, which is the first weekend in September.

This presents another opportunity for bargain-hunters to acquire a refinery at far less than the cost of building one. Such buyers will need a full appraisal of the refinery, including its capacity for crude supply and offtake of products, manufacturing capability of products, and operating costs. These are tasks I have performed previously, and am prepared to do so again should a buyer request.

Roger E. Sowell, Esq.

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