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Megarefineries can wait

Tuesday, November 6, 2012

Valero Energy in 2010 sold its New Jersey refinery, which can process 180,000 barrels a day of crude oil. The price? Just over $700 million.

Valero is reported to be seeking buyers for its two refineries in Texas, which together have a daily capacity of more than 400,000 barrels. The price for both is likely to be around $2 billion.

These values should provide food for thought to Costa Rican planners, who plan to spend $1.4 billion on a project, which includes the construction of a new refinery, and the refitting of an old one, and which in total would process no more than 60,000 barrels a day.

Likewise, Nicaragua’s long-stalled "Supreme Dream of Bolívar" refinery – largely financed by Venezuela, would have a capacity of only 150,000 barrels per day, at a cost of some $6 billion.

These figures seem to make nonsense of the current values of well-managed US refineries.

Central America would likely do better, if it invested in alternatives to oil, such as liquefied natural gas, which is cleaner and cheaper.

Gas would replace oil in power plants, as well as in public transport systems, such as the modern expressway buses already being used in Mexico and Colombia.

The refinery dreams of bureaucrats can wait.