Hydrocracking

Vacuum gas oil or VGO is one of those mystery products talked about by refiners but barely understood by those of us that are not engineers. However it is an important intermediate feedstock that can increase the output of valuable diesel and gasoline from refineries. Lighter shale crudes such as Eagle Ford can produce VGO material direct from primary distillation. Today we shed some light on this semi-finished refinery product.

Valero’s brand new $1.6 B, 60 Mb/d hydrocracker is set to ramp up at the company’s Norco, LA refinery this month (July 2013). They added a similar unit to their Port Arthur refinery last year and plan to expand existing units at their other refineries. Hydrocrackers leverage cheap US natural gas to boost production of ultra low sulfur middle distillates. That makes sense because of high diesel refining margins and a boom in exports over the past two years. But not many refiners appear to share Valero’s enthusiasm for these investments.  Today we consider the benefit that these upgrading units offer.