The Eagle Ford shale formation will put out 500,000 barrels of crude oil a day by the end of the year, Valero Energy Corp. (VLO:US) Chief Executive Officer Bill Klesse said after the company’s annual meeting in San Antonio.
Producers have told him output from the South Texas formation may rise to 1 million barrels a day in the next few years, Klesse said. Production in 2011 averaged 60,000 barrels a day, according to data from the Texas Railroad Commission, which regulates the energy industry in the state.
“It’s going to back out sweet crude imports into the United States, and that’s going to happen by 2014,” Klesse said.
The rising production is decreasing feedstock cost at Valero refineries in Houston, Corpus Christi and Three Rivers. The Houston refinery, which used to get all its crude oil from west Africa, now runs almost entirely on cheaper domestic crude, he said.
Klesse said he expects more oil from Canada and the U.S. Midwest to be moved to the Gulf Coast in the coming years.
He said he believes President Barack Obama will approve the northern leg of the Keystone pipeline project in early 2013 if re-elected.
“My goodness, we slapped Canada in the face,” Klesse said. “He’ll fix it.”
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