Gary Simmons: I think a lot of that gets driven by availability of intermediate feedstock’s VGO. In a tight VGO market, then you’re kind of forced more to swing either gasoline or diesel. So far, availability of VGO has been okay. We’ve been able to fill all the conversion units. But we’ll have to see how that goes moving forward.
Roger Read: Okay, thank you.
Operator: Thank you. The next question is coming from Manav Gupta of UBS. Please go ahead.
Manav Gupta: Congrats on a strong quarter again, guys. And my first question here is the [bare pieces] (ph) on refining somewhere was [Des Baggott] (ph) and Dangote. And it looks like it’s not played out these assets or from what we can read and hear, one of them doesn’t have enough hydrogen, the other doesn’t even have an FCC [receipt] (ph), so, most likely, will not be providing products to the markets maybe even year-end 2024. But my point is, even if they do start providing products to the market somewhere in 2025, are these the last two ones that you are aware of or there’s a big wave coming after this? So, I’m trying to understand if even if these two come on, they don’t really change the globally supply dynamic. So, after this, again, we could see the markets tightening up again. So, if you could help us out there?
Gary Simmons: Yes, so we see it exactly like you’ve described. This year was the year where you had kind of a peak in terms of new capacity additions. And then, from this point forward, you get to where global petroleum demand outpaces new refinery capacity additions significantly. And we see several years of tightness.
Manav Gupta: Perfect. The other point is that we generally see big projects get delayed, cost overruns. You’re somewhere unique, your projects get announced and the actual start date keeps moving forward from the announcement, which is absolutely unique to you. And I’m just trying to understand, like, how are you doing this? And I’m hoping I get an answer which is more than we have the best people because we already know that. So, help us understand how are you pulling forward your projects?
Lane Riggs: Well, Manav, obviously, that’s what I was going to say. But it speaks to the culture. Our culture is very much about high discipline, high accountability, and teamwork. We make sure we get the right people into the right jobs and hold them accountable. And making sure that they’re — and when I say the right people, they have to be people who are A, competent and B, they’re willing to work with the other team members who may not necessarily be under them or adjacent to them, and ultimately working on behalf of Valero. And we have a high level of visibility with upper level management because we’re a pretty organization. So, we all know the status of the projects. We all understand where we are in the development cycle. And once the project starts, I mean, it’s not like there’s, it’s just ultimately it’s about alignment, competency, and accountability. And that’s really the secret sauce. You just got to execute you know.
Manav Gupta: Thank you, sir.
Operator: Thank you. The next question is coming from Ryan Todd of Piper Sandler. Please go ahead.
Ryan Todd: Thanks. Maybe a follow up a little bit on some of the crude mix questions from earlier. I mean, with TMX, there’s a lot of focus on what the impact is going to be, particularly on complex mid-con refineries that are going to have to run more light sweet crude going forward. But in some ways, it’s similar to what’s happened across the broader refining system that’s been running more and more light crude across a system that’s not optimized for this. I mean, can you talk about what you think this might mean for the optimization of the global refining system? With more light sweet crude, what sort of impact does this have on utilization or optimization or general supply as we think about broader market?
Gary Simmons: Yes. So, this is Gary. So, globally TMX doesn’t have that much of an impact. It’s just rebalancing the barrels. I think you see some of the heavier barrels from South America that were going to the West Coast won’t travel there and they’ll probably go more to the Far East and some more TMX barrels starting to go to the West Coast, so, globally, not a big impact. We definitely see that hard to see differentials will come in because for a period of time here, we’ll have the logistics to completely clear Western Canadian production. And that could cause some switching of mid-continent refiners that they back off on some of the heavies and go to a lighter diet. And, yes, to your basically to your comment, certainly in the Gulf Coast, as we tried to run a lighter diet, it’s resulted in lower overall utilization because we hit light limits on the crude units.
Ryan Todd: Thanks. And that’s probably something that’s happening on a broader sense across the system with general global crude mix being lighter, right?
Gary Simmons: Yes, I think overall, the average crude gravity is up about one and a half numbers, which certainly results in lower utilization because especially most new capacity always designed for medium and heavy sour crudes.
Ryan Todd: Thanks. Maybe switching gears to diamond green diesel. I mean, as you think about the broader, obviously, we’ve been through a soft spot here on renewable diesel margins with RINs and LCFS pricing low. As you think about the outlook into the back part of this year and into 2025, can you maybe walk through how you view some of the moving pieces that could tighten up that market and improve kind of the relative profitability of whether it’s renewable diesel or then eventually SAF in 2025?
Gary Simmons: Yes, I think the rest of this year, it’s really going to be a question of what some of the other startups look like. , we’ve seen in the news a lot of announcements of slowdowns, project delays, even some shutdowns. Is that capacity comes offline or slows down? How does that balance versus some of the projects that are starting up in the overall D4 RIN balance at the end of the year? It’s a little difficult to throw a dart and know exactly how that’s going to end. What we can see is veg oil, whether it’s BD or RD is negative. Ag products all look very long right now. We do see — we were expecting more competition on waste oils. We haven’t seen as much of that as we thought we would considering the announced startups.
