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Bill Klesse, CEO of Valero on the Keystone Pipeline

Date: January 24, 2012

To: Valero Employees

From: Bill Klesse

Subject: Keystone XL Pipeline Statement

As you know, the Obama administration decided last week to deny TransCanada’s application to ship crude oil via the Keystone XL pipeline from Canada to the Gulf Coast. Valero has planned to be a shipper and purchaser of that oil since 2008, and obviously we were disappointed in the decision. We issued a statement in response to questions from the media, and I wanted to share it with you in case you get questions from friends or business partners, and so that you would know why Valero supports the Keystone XL pipeline.

This is the statement: Despite the uncertainty and political fighting over the Keystone XL pipeline, Valero has continued to invest in its U.S. refining operation. In 2011 we spent nearly $3 billion on projects, and for 2012 our capital expenditure budget is over $3 billion. These expenditures are keeping our employees on the job and putting additional people to work.

To reference two of our refineries, at Port Arthur, Texas, we have 1,600 contractors working on an expansion project, and at St. Charles Parish, Louisiana, we have another 1,000 contractors working on a separate project. We need this kind of economic activity to accelerate to help all Americans.

This illustrates why the federal government’s rejection of the Keystone XL pipeline is so absurd. There are pipelines in every neighborhood all across America. The administration’s decision was not about pipelines, it was about the misguided beliefs that Canadian oil sands development should be stopped and that fossil fuel prices should increase to make alternative energy more attractive.

Instead, we should be impressed with how well the oil sands engineering and recovery technology has advanced, and the economic benefits this development brings. Having more oil available in the marketplace has the potential to lower prices for consumers. As an independent refiner, Valero buys all of the oil we process.

Due to the administration’s misguided policies, refiners like Valero will have to buy more oil from other sources outside the U.S. and Canada. Consumers will bear the additional shipping cost, not to mention the additional greenhouse gas emissions and political risks.

With all the issues facing our country, it is absolutely unbelievable our federal government says no to a company like TransCanada that is willing to spend over $7 billion and put Americans to work on a pipeline. The administration’s decision throws dirt into the face of our closest ally and largest trading partner.

The point above is that it is not about pipelines as many pipelines cross the Ogallala Aquifer, in the Great Plains region, and, in fact, there is already significant oil and gas production in the area covered by the aquifer. This is politics at its worst.

Thanks for your support.

 

Until next time,

Polly

13 Comments
  1. Polly, what is the source of this memorandum to employees?

    • I am not sure I understand the question. Bill Klesse sent this to his employees.

      • There is no evidence of this message on the Valero website and the style combined with grammatical errors doesn’t look like any correspondence Klesse would release for public consumption. Basically, I’m asking “how did you confirm that this message was actually released to Valero employees?”. It looks bogus; suspicious; unauthenticated; ???

    • Wait, so you don’t have any idea if this really came from him or not?

  2. Looks strange to me as well. There is no signature at the bottom.

  3. If it wasn’t sent by Klesse, it should have. Read today’s news (April 17, 2012). Obama is going to investigate energy “manipulators”. He should start with his own administration’s unwillingness to approve the Keystone Pipeline so that alternative energy providers and the green crowd stay in his ever diminishing court.

    • I personally don’t have any problem with this not getting approved. There is absolutely nothing in Keystone that is good for American consumers. Valero has been very public with their intention to buy this oil and refine it to diesel. The US doesn’t use much diesel at all. The rest of the world uses lots of diesel. Also, for everyone who thinks that there is one world oil market, do a little research. As of today (April 17) oil from Texas that is sold in NY is over $12/barrel less than oil from the North Atlantic (Brent) sold in London. The reason this pipeline goes all the way to Houston is so it cab be sold in an international free trade area and shipped to the rest of the world. The net affect is that oil that couldn’t get to the international market and had to be sold to refineries in the central part of the country (IL, OK, etc.) and then sold to Americans will now be removed from that market.

      Supply and Demand. The Demand for this oil is very high in the rest of the world and the companies involved can charge more for it by selling it to the English, Argentines, etc. That also reduces the supply of oil in the continental market. Guess what is going to happen to prices in that market when the supply goes down? That is right, higher prices for American consumers. But, RJ Duran thinks that this is a good idea. I wonder what RJ has to gain from it?

      • The oil would be refined into diesel, and sold. It doesn’t matter what it is made into, and it doesn’t matter who it is sold to. Jobs would be created.

        • Wow, this reply lacks so much detail or thought it is almost difficult to imagine what prompted you to even make it. How many jobs? For who? How does the economic benefit of the jobs compare to any negative environmental impact? If you don’t want to include all the details here, maybe just summarize and leave a link to something that shows all the details. Thanks.

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