By ROBIN SHANNON

Staff Reporter

NORCO – The Board of Directors for Valero Energy Corp. has approved a $1.4 billion expansion of its refinery in St. Charles Parish, increasing production capacity to 300,000 barrels of oil per day.

Bill Day, director of media relations for Valero, said the move to expand is part of the company’s overall approach to focus on what he calls “flagship refineries.”

“The Norco refinery is one of our company’s larger facilities,” said Day. “Its location along the Gulf Coast, which has the highest concentration of refinery employees, made it a sensible choice for expansion.”

Day explained that the expansion would involve construction of a new hydrocracker unit, as well as expansion of the refinery’s coker and crude unit. The project is expected to increase production of gasoline by 11,000 barrels per day, and ultra-low sulfur diesel by 49,000 barrels per day.

“It is part of our strategy to increase the proportion of ultra-low sulfur diesel produced in our system,” said Day. “We see more growth in that market over gasoline because of ethanol blending.”

Day said Valero applied for the expansion permits in October 2006, and said the board of directors approved the project last month. He said it is quite possibly the largest capital project in the history of the company.

“We’ve always gotten good returns from the St. Charles area,” said Day. “I am pleased with the board’s decision to approve the deal.”

Day said the expansion would create about 30 permanent full time jobs, and about 1,500 construction jobs. He said the company hopes to break ground on the expansion sometime in 2008. The project is set to take about two years to complete, and when it is finished, it would make the Norco refinery the 12th largest in the United States, according to production figures from the US Department of Energy.

Day explained that a hydrocracker is a unit that produces distillates such as diesel, kerosene, and heating oil by combining hydrogen gas with a catalyst in an effort to break down the heavier elements of crude oil. He said a coker unit is a device that extracts whatever light molecules of the crude that are left and produces other forms of fuel that look and burn similar to coal.

Day said the hydrocracker that Valero is building for Norco would produce 50,000 barrels of oil per day. The coker unit expansion would increase production in that realm by 11,000 barrels per day.