Excellence Refined - 30 Years - Valero

Longtime Valero refinery executive John Hohnholt (center)
gives an early tour of Valero’s “Refinery of the Future” to
Corpus Christi Mayor Luther Jones (right).
The Corpus Christi Refinery would not be named Saber for long. Valero bought Saber’s 50 percent ownership in 1984.
The company’s early diversification efforts resulted in
an increase of total NGL production to more than 1
million gallons per day (20,000 BPD), plus investments
in an oilfield supply company, a coal company and other
areas in the energy sector. Even in 1981, Valero continued
growing, expanding its oil exploration and production
operation, opening offices in Midland, Houston, Denver
and New Orleans. But a recession and a volatile energy
industry soon put the company in a new direction.
Demand decreased and the market was flooded with
oil. Consequently, the price of oil plummeted – from
more than $30 a barrel to barely $9 in 1986. With the
downturn, Valero began phasing out its exploration and
production interests. Few observers realized it, but a new
course was starting to take shape.
Refinery of the Future
In 1981, Valero made a fateful, if not surprising, decision
to purchase an interest in a small refining company in
Corpus Christi, Texas. The $51 million purchase of 50
percent ownership in Saber Energy was Valero’s most
significant growth initiative to date, giving access to a
modest crude unit and vacuum unit that would pave the
way for future growth in an untapped and undervalued
industry.
The Saber operation was a simple, moderately profitable
configuration for a refinery. But its position on the Corpus
Christi ship channel made the venture attractive – an ideal
site to build a world-scale facility. In the years leading up
to Valero’s purchase, Saber employees had watched their
company struggle financially and grow hungry for a cash
infusion after federal regulators decontrolled the market
and placed small refiners at a competitive disadvantage.
Valero, with better financial footing, seemed just what
the doctor ordered.
Outside the walls of Valero, however, analysts and
investors were increasingly critical of ambitious plans
for the site. Taking a modest refinery to a full-scale,
7 Valero Lines 3oth anniversary edition