Excellence Refined - 30 Years - Valero

outreach projects and enthusiasm. The effort paid off
as the newly owned refineries began to grow their own
presence. Valero’s efforts to quickly improve efficiencies
and reduce expenses made the refineries profitable for
the first time in many years. Although Valero owned
the plants for just six months in 1997, they contributed
$84 million to the company’s operating earnings.
It was the dawn of a new era. As a result of the natural
gas spin-off and restructuring, 1997 was – to that point –
the company’s most rewarding and most profitable year
in its history.
More than refining. Redefining.
——
Valero Energy Annual Report, 1998
In September 1998, Valero aggressively secured a
foothold in the Northeast to become the secondlargest
independent refining company in the nation.
Its fifth refinery purchase – Mobil’s 155,000 BPD
plant in Paulsboro, N.J. – cost $228 million plus
$108 million for inventories and working capital. With
Paulsboro, Valero’s refining capacity increased by another
25 percent, giving the company a formidable throughput
capacity of 735,000 BPD barely a year into its acquisition
mode. In addition, the refinery diversified the company’s
product slate as one of the top-performing lube plants
in North America at the time. Like the Basis acquisition,
however, there was good reason for the steep discount.
The 80-year-old refinery was in disrepair, and many
operating units were abandoned or rusting away. Within
weeks of purchase, the refinery’s makeover began, and
Valero Pride officially arrived in the Northeast. Paulsboro
represented Valero’s first transaction with one of the
world’s “major” oil companies and bolstered its presence
in the U.S. refining business.
acquisition didn’t just give Valero access to the West
Coast market, it put the company on the industry map.
It was a bittersweet transaction for Exxon, however,
whose complex Benicia operation was (and continues
to be) one of the most profitable in the nation. But in
order for Exxon to complete its merger with Mobil at the
time, the Federal Trade Commission insisted the asset
be sold. “This was Exxon’s most profitable refinery, and
they would never have sold it if the FTC had not required
it,” said Rich Marcogliese, former plant manager of the
Benicia Refinery and current Executive Vice President and
Chief Operating Officer. “It’s hard to imagine a better
strategic investment for Valero and its shareholders.”
Before Valero could do all that it envisioned, however,
it first had to finalize the acquisition with Exxon. The
bidding process was hard-fought between Valero and its
competitors. But Exxon officials made it clear that the
Paulsboro
California Shines on Valero
Considered one of the most important strategic
acquisitions in Valero’s history, the company in 2000
acquired Exxon’s 165,000 BPD refinery in Benicia, Calif.,
a small community northeast of San Francisco. The
In 1998, Valero purchased Mobil’s refinery in Paulsboro, New Jersey, giving
the company geographic diversity like never before. Valero became the nation’s
second-largest independent refining company, with a throughput capacity of
735,000 BPD.
15 Valero Lines 3oth anniversary edition