"We were looking for a way to lock in supply of electricity for the refinery," says Bill Day, a company spokesman. "It's very windy in that area and we have a lot of open land (there) Valero owns, so it was conducive to building a wind farm." Valero signed a contract with GE Energy for 33 of the firm's 1.5 MW turbines and used an in-house development team to build the project. "Around 50 MW is what the refinery unit's production needs are in terms of power," says Day. "So when the wind is blowing and the wind farm is generating capacity, it is enough to power the refinery."
The project is connected to the power grid to ensure steady supply of electricity but has a special arrangement with a local utility provider to feed electricity from the wind farm to the refinery whenever the wind is whipping and the project is generating power. "I don't know of any other oil refining companies that are in the wind business and 50 MW is a pretty good size wind farm," says Day.
Oil giants such as BP and Shell are involved in the wind business, but they are large integrated energy firms with vast exploration and extraction businesses. Day believes Valero is the only oil refiner to dive into wind on its own. Its refineries are enormous consumers of energy, says Day, and the wind project allows the company to use the natural renewable resources at the location while securing a relatively steady and predictable long-term energy cost for the facility.
Owning renewable energy assets and using them directly for its business could also help cushion the company against the possibility that future climate change or energy legislation in the US could penalise large industrial consumers of energy.
The project has been such a success that Valero's management has studied its other industrial locations in Texas to see if it could be replicated, but only at this site did the economics and other factors stack up. "This one was where we were able to get the best combination of available land, not a severe environmental impact and very strong and steady winds," says Day. "That combination doesn't really exist at our other refinery sites. We did look at coastal locations with good wind but we didn't have the amount of land available.
"Whether it's cost effective depends on the going rate for electricity and that is determined a lot by natural gas and, right now, natural gas is relatively cheap," adds Day. "But should gas prices go up again, it would make doing more wind projects more attractive."
If the company does a second wind project it may be in the upper Midwest, where it recently bought ethanol refining facilities. "There's a lot of wind power generation being built in Iowa, South Dakota, Nebraska and places like that, where we just bought seven ethanol plants," says Day. "That's more in the conceptual phase, but another project could make sense there because it's quite windy and there's a lot of available land."