Valero Energy Corp. has secured a permit from the U.S. Commerce Department to ship crude oil from the Gulf Coast to its plant in Quebec as part of a plan to lower the cost of its feedstock.
Most of the crude will come from South Texas’ Eagle Ford Shale and will displace the light, sweet crude that Valero now buys from Europe and Africa.
Shipping Eagle Ford oil from the Gulf Coast to Valero’s 265,000-barrel-a-day plant near Quebec City will cost about $2 a barrel less than shipping crude across the Atlantic, Valero spokesman Bill Day said.
“The permit would bring additional Eagle Ford crude to Quebec, and there is a lot of Eagle Ford crude,” Day said.
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U.S. crude production gains have mostly come from the Bakken and Eagle Ford shale formations in North Dakota and South Texas, according to Energy Department data.
U.S. crude being shipped to Canada would displace light, sweet oil from West African nations such as Nigeria and Angola, Amrita Sen, chief oil market analyst for Energy Aspects Ltd. in London, told Bloomberg News.
“We’re going to see more volumes shipped to Canada” from the Gulf Coast, Sen said.
Valero’s refineries in Three Rivers, Houston, Corpus Christi and Meraux, La., now process Eagle Ford crude, Day said. Also, the company is shipping about 40,000 barrels a day of Bakken crude to its Memphis refinery by a circuitous route that takes it by rail to Louisiana and then via pipeline to Memphis.
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It was always intuitive, to me anyway, that increased domestic production would lower the price of gas. President Obama kept claiming otherwise as he resisted increased domestic production on federal sites. I think he was basing his argument on ideology and not sound economics. He wanted to have the excuse to push his inefficient alternative energy agenda despite facts that should be obvious. Fortunately there were enough non federal sites to increase production and help reduce prices.
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