Valero: Biofuels Digest’s 2014 5-Minute Guide

April 15, 2014 |

Valero Energy Corporation, through its subsidiaries, is an international manufacturer and marketer of transportation fuels, other petrochemical products and power. Valero subsidiaries employ approximately 10,500 people, and assets include 16 petroleum refineries with a combined throughput capacity of approximately 3 million barrels per day, 10 ethanol plants with a combined production capacity of 1.2 billion gallons per year, and a 50-megawatt wind farm. More than 7,300 outlets carry the Valero, Diamond Shamrock, Shamrock and Beacon brands in the United States and the Caribbean; Valero Energy Inc. in Canada; and Texaco in the United Kingdom and Ireland. Valero is a Fortune 500 company based in San Antonio.

The Situation:

Though primarily known as an oil & gas refiner, Valero has substantial ethanol assets and investments in advanced biofuels technology.

In March 2014, Valero purchased a corn ethanol plant in Mount Vernon, Ind. from Aventine Renewable Energy-Mt. Vernon. The Mount Vernon plant is the 11th corn ethanol plant in Valero Renewables’ system and its second in Indiana. With an annual capacity of 110 million gallons, the addition will give Valero more than 1.3 billion gallons per year in ethanol production. The plant has been shut down for approximately two years, but Valero Renewables plans to begin a restart program and resume production within the next several months.

In 2013, Diamond Green Diesel, the joint venture between Valero subsidiary Diamond Alternative Energy LLC and Darling International, reached mechanical completion. Once in full operations, the 9,300 barrel-per-day (142.5 million gallon) plant in Norco, Louisiana will process recycled animal fat and used cooking oil as well as corn oil into renewable diesel fuel that has comparable properties to petroleum-based diesel. The renewable diesel can be shipped by pipeline and meets low-carbon fuel standards.

Model:

Owner-operator

Past milestones:

In August 2013, Valero confirmed that it has pulled out of a proposed $232 million Mascoma second-generation facility in Kinross Charter Township. The project has received $120 million in public money for the wood-to-ethanol project. The project hasn’t yet broken ground despite construction having meant to start in 2011 with production coming online in 2013.

In June 2011, Enerkem closed a $60 million financing round that includes Valero Energy Corp. who joins existing investors Waste Management, Rho Ventures, Braemar Energy Ventures and Cycle Capital, who each invested in the new equity round.

In 2010, Valero announced a joint development deal with Florida-based Algenol Biofuels, describing a “relatively small investment” but not offering details on the deal. Algenol said in media reports that the development deal calls for the two companies to place algae farms next to refineries, and using the carbon dioxide as a feedback for the production of ethanol and renewable chemicals. Linde and Dow Chemical have previously partnered with Algenol, while Valero has previously invested in Solix, as well as the waste-to-ethanol company Terrabon.

Valero is also an early investor in ZeaChem.

In 2009, Valero also invested in Solix Biofuels.

Future milestones:

RFS repeal? Valero’s CEO told a Senate hearing that the Renewable Fuel Standard is “broken” and should be repealed and replaced with a better functioning policy. The blend wall has led to soaring RIN prices that oil refiners must pay because they say that ethanol can’t be blended any higher, so their backs are against the wall, literally, forcing prices higher.

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