Refiner Valero Energy Corp. on Tuesday posted a $254 million loss for the second quarter, largely because of lower demand for the products it makes: gasoline, diesel and jet fuel, among them.
As such, the San Antonio-based company has been forced to shut down or slow production at some of its 16 refineries in the U.S., Canada and the Caribbean. Most recently, Valero ceased production at its refinery in Aruba earlier this month and said Tuesday it would decide in September whether to resume operations there.
In its earnings release, Valero noted it would monitor its other refineries "for situations in which it makes economic sense to slow or shut down specific units or the entire plant."
On a conference call with analysts, Chief Operating Officer Rich Marcogliese discussed refining operations.
QUESTION: In your press release, you talked about considering monitoring refineries for potential (production) cuts and shutdowns of units or other plants in addition to Aruba. Could you talk about the process you go through in that evaluation?
RESPONSE: "We obviously are watching the gross margin contribution of all our refineries. ... On Aruba, we've placed the refinery in what I would call a 'hot mothball' status, where we're conducting maintenance on the refinery. We've retained all of our employees but we have made an initial reduction in the daily contractors that would support an active plant's operation. Should a plant move into a 'cold shutdown' status that would involve additional steps that would potentially impact employees and additional contractor reductions. There are some required notifications in that process that would take place of a regulatory nature and then, of course, there's the Warren Act which requires 60-day notice of any potential employee layoffs."
