Valero CEO sees U.S. importing more Canadian oil
HOUSTON (Reuters) - Valero Energy Corp (VLO.N: Quote) Chief Executive Bill Klesse said he expects crude oil from Canada and U.S. shale production will eliminate the need to import light, sweet crude oil at the U.S. Gulf Coast by 2016.
That change in supply will push the price for Light Louisiana Sweet (LLS) crude oil from the premium on Brent crude oil seen currently to a possible discount by 2016, Klesse said in webcast presentation to the Bank of America refining conference.
"Canadian oil is coming to the Gulf Coast and it's going to change this industry tremendously," Klesse said.
Valero, the leading independent U.S. refiner, has bet big on Canadian crude being piped to the Gulf Coast where the company has its largest refineries.
Valero has been modifying its 292,000 barrel-per-day (bpd) Port Arthur, Texas, refinery to receive crude from the TransCanada Corp's (TRP.TO: Quote) controversial 1,700-mile (2,736-km) Keystone XL pipeline planned to bring Canadian crude to the Gulf Coast.
In January, U.S. President Barack Obama rejected TransCanada's due to environmental concerns, primarily in Nebraska, but left the door open for TransCanada to submit a revised plan in 2013.
"It's probably going to happen on Obama's timeline," Klesse said, "with approval in the first quarter of 2013."
The price for Brent should slide to from what Klesse called a structural $2 per barrel premium on LLS to parity with or a discount to Brent by 2016.
(Reporting by Erwin Seba; Editing by Alden Bentley and Lisa Shumaker)
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