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SAN ANTONIO -- The board of directors for Valero Energy Corp. approved a new $3 billion share repurchase authorization, along with its largest-ever capital investment project -- an expansion at its refinery in Port Arthur, Texas, the company stated.
Valero purchased $5.8 billion worth of its stock in 2007, and has $1 billion remaining under a previously announced buyback, which will give it $4 billion available for stock repurchases going forward, the company stated.
The $2.4 billion expansion will involve the construction of a 50,000 barrel-per-day hydrocracker, a 45,000 barrel-per-day coker and upgrades and expansions of numerous other units, according to the company. The project is expected to boost the refinery's overall throughput capacity to 415,000 barrels per day, which will give Valero additional capacity to process heavy, sour feedstocks, the company stated.
"The Port Arthur expansion project emphasizes ultra low sulfur diesel production -- reflecting the significant projected growth in demand for diesel both in the U.S. and around the world," Bill Klesse, chairman of the board and CEO of Valero, said in a statement. "The Port Arthur […] expansion project signals major investments in Valero's internal growth strategy, and coupled with the stock buyback program, is part of our continued effort to maximize shareholder value by taking a balanced approach to allocating our cash flow."
Valero estimated that the hydrocracker project will be finished in the fourth quarter of 2010, while the coker project is expected to be finished in the second quarter of 2011.