Valero (VLO) & Darling Eye Second Renewable Diesel Facility
Zacks Investment Research | Sep 11, 2019 11:05PM ET
Valero Energy Corporation (NYSE:VLO) and food processor Darling Ingredients Inc. (NYSE:DAR) recently commenced the evaluation process of a new plant in Port Arthur, TX. With countries adopting more low-carbon initiatives, it intends to tap into the growing global demand for renewable diesel.
The facility is expected to produce 400 million gallons of diesel per annum and 40 million gallons of renewable naphtha. Valero expects to take the final investment decision on the project by 2021, following which the construction work will start. The facility is expected to come online by 2024. It will be Texas’ first facility to produce renewable diesel.
Notably, this will be the refining giant’s second renewable diesel plant with Darling. Diamond Green Diesel Holdings LLC, a 50-50 joint venture (JV) between the two companies, will own and operate the facility. The JV’s first plant in Norco, LA — North America’s largest biomass-based diesel facility — forms huge part of Valero’s Renewable Diesel segment, which was created in first-quarter 2019.
The segment accounted for 6.8% of its total operating income in second-quarter 2019 and the figure is expected to grow further with the Norco plant’s expansion. Valero is on track to boost the facility’s production capacity to 675 million gallons by 2021 from the initial figure of 275 million gallons. If everything goes according to plans, Valero will end up with a production capacity of 1.1 billion gallons of renewable diesel per annum and almost 100 million gallons of renewable naphtha.
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