Below is an update of operations, community support & employee support:
We have not yet requested oil from the SPR but that remains an option.
To date, we have been able to cover substantially all of our contractual obligations.
We recognize that prices are high. The market is responding to the overnight loss of almost 2 million barrels per day (BPD) of domestic production. Since the U.S. is already dependent upon 1 million BPD of imports to meet demand, there is a real fear of shortages in the near-term. Pipeline outages due to power losses have exacerbated an already challenging situation.
Spot gasoline prices for wet prompt (physical) barrels have experienced unprecedented increases. As a company, we have chosen to "lag the market" and are keeping our retail and wholesale branded price increases far below the market increases. (We are not passing through the full cost of spot market increases.) In fact, our retail & wholesale branded prices are 40 to 50 cents per gallon below spot market prices.
Hopefully, when power is returned and pipelines and refineries begin t return to normal operations, we will see pump prices moderate. The release of crude from the SPR and the EPA's relaxation of environmental standards in certain regions of the country should help as will the imports we see headed to the U.S. at this time.
If you have additional questions, please let us know and we will try to address them as quickly as possible.
St. Charles Update
August 31, 2005
Update:
No significant structural damage to our refinery, retail stores, LP pipelines or asphalt terminals.
· Currently we have no power at the St Charles refinery & are continuing to pump water out of the refinery. Now down to 12 to 18 inches.
· Two retail stores are running on generator power.
· Unfortunately, we haven’t been able to assess damage at our Valero LP terminal in Westwego, where the storm was strongest, because of flooding in the area.
· Krotz Springs not impacted but running at minimum rates (or 48,000 bpd) due to pipeline problems.
· We have asphalt terminals in Mobile, Alabama & St. James Parish in Louisiana. Both are down due to power loss but not significantly damaged. The Mobile terminal also experienced flooding.
· All employees in all locations were safely evacuated last weekend and are only now beginning to trickle back into the area.
EMPLOYEE SUPPORT
· 20-person electrical crew from Corpus Christi/Three Rivers leaves for St. Charles at noon today – also sending electrician & maintenance folks from corporate.
· Hope to have refinery up in about two weeks.
· Employees only now beginning to return to the area so no assessment of damage to employees’ homes yet but we will provide whatever assistance is needed for our employees (financial or other).
· We have about 1000 employees in the impacted area (Alabama, Louisiana & Mississippi)
· Many employees will have to stay at the refinery. Have already trucked shipments with food, water and electrical generators to the refinery
· Sending mobile kitchen & cooks from SA to assist
· Sending 100 x 150’ air conditioned tent down for next three months –
· We are coordinating delivery of 20 portable living trailers to be located across from refinery main office building (and possibly more)
· Corporate providing cash to refinery to support local employee emergency needs
· IS will be locating satellite hook-ups at St. Charles and Krotz Springs to improve communications
COMMUNITY SUPPORT
· $1 million Corp. donation to Red Cross
· Fuel availability is a problem in the local area. Refinery has been providing fuel trucks for local emergency services
· Sending truckloads of food & supplies from our Retail Distribution Center to shelters in the impacted area
· Coordinating employee contribution to Red Cross
· Blood drives, food & clothing drives going on throughout the system
· Supporting dislocated folks in local shelters in many of our communities