Valero Energy new 470 MMgy renewable diesel plant

Valero Energy Corp. has announced it will immediately move forward with the development of a new 470 MMgy renewable diesel plant at its refinery in Port Arthur, Texas. Expansion projects are also underway at the company’s existing Diamond Green Diesel facility.

Joe Gorder, chairman and CEO of Valero, discussed the company’s three renewable diesel projects during a fourth quarter earnings call held Jan. 28. All three projects are a joint venture developed by Darling Ingredients and a subsidiary of Valero Energy.

Gorder also announced board approval for the proposed 470 MMgy renewable diesel project in Port Arthur, referred to as DGD 3. “We’re moving forward with the project immediately, and we now expect the new plant to be operational in the second half of 2023,” Gorder said. “Once DGD 3 is complete, DGD’s combined annual capacity is expected to be 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha.”

There is also potential for Valero to shift production to sustainable aviation fuel (SAF) in the future. During the call, Martin Parrish, senior vice president of alternative energy and project development at Valero, explained that the modifications required to shift a plant from renewable diesel production to SAF are significant, but not huge. “We could pivot there when we need to pivot there,” he said, noting that the company does expect to see some SAF mandates established across the globe, but doesn’t know when those mandates might be put in place.

Valero’s renewable diesel segment reported $127 million of operating income for the fourth quarter, down from $541 million during the same period of 2019. After adjusting for the retroactive blender’s tax credit in 2019, adjusted renewable diesel operating income was $187 million for the fourth quarter of 2019. Renewable diesel sales volumes averaged 618,000 gallons per day in the fourth quarter of 2020, a decrease of 226,000 gallons per day versus the fourth quarter of 2019 due to the effect of planned maintenance in the fourth quarter of 2020. The renewable diesel segment set a record for annual sales volumes of 787,000 gallons per day in 2020.

Valero currently expects renewable diesel sales volumes to be at 790,000 gallons per day in 2021, with operating expenses expected to be at 50 cents per gallon.

What is renewable diesel fuel?

Renewable diesel—Renewable diesel is a biomass-derived transportation fuel suitable for use in diesel engines.  Renewable diesel is a hydrocarbon diesel fuel produced by hydroprocessing of fats, vegetable oils, and waste cooking oils. At its most basic definition, renewable diesel fuel is a direct substitute for diesel fuel that is refined from lower carbon and renewable source materials.

Is renewable diesel the same as regular diesel?

Biodiesel is not only sustainable, it’s a more environmentally-friendly, cleaner-burning option that can be used in diesel engines without modification. In fact, biodiesel decreases greenhouse gas emissions by 56% to 86%, meaning that the use of biodiesel has already cut 75.5 million metric tons of carbon pollution.

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