Valero recently announced their plans to build a petcoke gasification plant in Beaumont, Texas. The Port Arthur Petroleum Coke Gasification Plant will convert petcoke to hydrogen. Valero already has a 289,000 BPD refinery in Port Arthur, Texas that processes heavy sour crude. Valero is the largest U.S. producer of petroleum coke.

Valero sees Petcoke as an ‘alternative fuel’ and an abundant source of low cost energy. Valero is working to upgrade the value of petcoke. Coal to chemical petcoke gasification plants is an excellent value added strategy for a company with a long position in petcoke.

The recently announced Port Arthur Petroleum Coke Gasification Project will increase the value of the company’s petcoke. The plant will convert 10,000 TPD petcoke and produce 450 MMSCF/D hydrogen, power and steam. The estimated investment is $2.5 billion and the planned start date is 2012. The plant will produce about 25,000 TPD CO2. The CO2 will be removed using an acid gas removal process for enhanced oil recovery or sequestration.

Valero has made previous announcements to build hydrocrackers at the Saint Charles and Port Arthur refineries. It’s conceivable, that these units will use all or most of the hydrogen that is produced at the Port Arthur Petcoke Gasification Plant.