UPDATE 2-Valero CEO says no plan to shut Del. City refinery
* CEO Klesse says Delaware refinery has "lots of value"
* Paulsboro, New Jersey, refinery also staying open
* East Coast refineries vulnerable in economic downturn
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By Erwin Seba
HOUSTON, Oct 27 (Reuters) - Valero Energy Corp (VLO.N) Chairman and Chief Executive Bill Klesse said on Tuesday the company had no plans to shut its 210,000 barrel per day refinery in Delaware City, Delaware, "because there's lots of value there."
Analysts quizzed Klesse during a conference call to discuss the company's third-quarter earnings about the future of the Delaware City refinery and one in Paulsboro, New Jersey.
Valero has said its refineries in Delaware City, Paulsboro and Aruba are undergoing evaluations for strategic alternatives, which some in the sector have said could lead to sales.
East Coast refineries are seen as especially vulnerable in the current economic downturn, with analysts warning of shutdowns and closures of refineries in that region.
On Oct. 6, Sunoco said it would idle its refinery in Eagle Point, New Jersey, due to poor refining margins.
Earlier this year, Valero indefinitely shut its 235,000 bpd Aruba refinery because of poor refining margins. The Aruba refinery supplied intermediate refined product feedstocks to Valero's East Coast and Gulf Coast refineries.
"I'm not saying we are going to shut it in any case because there's a lot of value there," Klesse said about the Delaware City refinery.
In contrast to Aruba, Delaware City is a sophisticated refinery, he said, capable of producing finished refined products. The refinery can more easily adjust operations and spending to realize better margins.
The 185,000 bpd Paulsboro refinery benefits from its lube oil production, some of which is sold under a long-term contract to Exxon Mobil Corp (XOM.N), Klesse said.
"Historically, it's 10,000 barrels per day," Klesse said of Paulsboro's lube oil production. "But it's had very good margins."
The company will continue to monitor margins into the spring to see if it needs to adjust operating plans at Delaware City, he said.
"We will see how we look next spring," Klesse said. (Editing by Marguerita Choy)
