Key Takeaways
Valero is buying a shuttered refinery in Houston, Texas, to restore 165,000 barrels per day of light, sweet crude oil processing capacity by the end of 2027 and potentially add heavier crude oil capabilities later.
While the shuttered refinery could also process heavy crude oil, that unit was demolished.
The refinery was the oldest in Houston, closed in February 2025 after operating for more than 100 years.
The deal covers about 700 acres on the Houston Ship Channel, next to Valero’s existing 205,000-barrel-per-day Houston plant. It includes 13.5 million barrels of storage, marine docks, rail-loading facilities, and truck racks.
Previously, refiners had looked to expand existing facilities rather than invest in new or shuttered refineries.
Earlier this year, President Trump announced a new refinery to be built in Brownsville, Texas, that will also process light oil.
Increased U.S. refinery capacity would help alleviate price pressures on petroleum products such as diesel and other distillates and contribute to energy security.
Valero Energy has agreed to buy LyondellBasell’s shuttered Houston oil refinery for $320.5 million, with plans to restore 165,000 barrels per day of light, sweet crude oil processing capacity by the end of 2027 and potentially add heavier crude oil capabilities later. The acquisition, expected to close by year-end, would give Valero access to Gulf Coast oil supplies and export infrastructure at a lower cost than building a new facility, reversing the trend of shutdowns and reduced interest in new refinery investments or expansions. Refiners have closed facilities across California and the Gulf Coast, including Valero’s 145,000-barrel-per-day Benicia refinery in Northern California earlier this year. Valero is not planning to restart its idled Benicia refinery in California, citing “a tough environment to operate” on the West Coast.
The refinery, purchased by Valero, is the oldest in Houston, was established in 1918, and closed in February 2025 after more than 100 years of processing crude oil. Valero plans to restart daily processing capacity of 165,000 barrels of light, sweet crude by the end of 2027. The deal covers about 700 acres on the Houston Ship Channel, next to Valero’s existing 205,000-barrel-per-day Houston plant. It includes 13.5 million barrels of storage, marine docks, rail-loading facilities, and truck racks. According to Valero, the site would ease an intermediate feedstock shortfall across its Gulf Coast system and cut third-party purchases. The deal is expected to complete by the end of this year, subject to customary closing conditions. The shuttered plant had also processed heavy crude oil that can be sourced from Venezuela and Canada, but the capability was removed in April when demolition knocked it out. Valero is considering investing in heavy crude oil processing at the refinery in the future.
Valero’s deal to reopen the Houston refinery reflects the potential for a refining industry renaissance. Earlier this year, President Trump announced a $300 billion refinery project to be funded by Reliance Industries, an Indian refining company, in Brownsville, Texas. The figure refers to the long-term total lifetime value of the trade agreement and off-take product transactions, rather than the initial capital construction cost. The refinery is being built to handle the light, sweet oil produced in large volumes from shale formations in the United States. Because this facility does not require imported oil, it will strengthen U.S. national and economic security. The facility is expected to take seven years to construct and can process around 60 million barrels per year. Over 20 years, it would purchase and process 1.2 billion barrels at a reported value of $125 billion. The refinery would be on 240 acres of the port’s land, and would include the introduction of liquid carbon docks. Liquefied carbon docks are sometimes floating — units designed for storing and transferring liquefied carbon dioxide and are critical pieces of infrastructure needed for facilities to do carbon capture, utilization, and storage.
The last major refinery built in the U.S. was located in Garyville, Louisiana, in 1976. According to the Energy Information Administration, U.S. refining capacity is currently 18 million barrels per day, with operational utilization over 90%. In recent years, refiners like ExxonMobil and Marathon Petroleum have invested in smaller projects at their existing refineries to improve yields of higher-value products. In 2023, ExxonMobil completed an expansion of its Beaumont, Texas, refinery, adding 250,000 barrels per day of crude oil processing capacity. With U.S. refinery closures, China is now the world’s leader in refining capacity. However, China stopped exporting refined products during several months of the Iran conflict because it did not want to deplete its oil stocks, preferring to keep them for domestic use.
Valero is the second-largest U.S. refinery operator with a total throughput capacity of 3 million barrels per day. It operates 14 refineries in the United States, Canada, and the U.K., as well as 12 ethanol plants in the United States with 1.7 billion gallons per year of production capacity.
Conclusion
Valero is buying a shuttered refinery in Houston, Texas, for $320.5 million to restore 165,000 barrels per day of light, sweet crude oil processing capacity by the end of 2027 and potentially add heavier crude oil capabilities later. While the shuttered refinery could also process heavy crude oil, that unit was demolished. The shuttered refinery, Houston’s oldest, closed in February 2025 after more than 100 years of operation. The deal covers about 700 acres on the Houston Ship Channel, next to Valero’s existing 205,000-barrel-per-day Houston plant. It includes 13.5 million barrels of storage, marine docks, rail-loading facilities, and truck racks. Previously, refiners had looked to expand existing facilities rather than invest in new or shuttered refineries. Earlier this year, President Trump announced a new refinery to be built in Brownsville, Texas, that will also process light oil. Increased refinery capacity in the United States would help alleviate price pressures on petroleum products such as diesel and other distillates and contribute to energy security.
