Darling International and a subsidiary of Valero Energy Corporation are taking initial steps towards the formation of a joint venture to build a facility capable of producing more than 10,000 barrels/day or (135 million gallons per year) of renewable diesel on a site adjacent to Valero’s St. Charles refinery near Norco, Louisiana.
The partners expect that the proposed facility would principally convert waste grease—primarily animal fats and used cooking oil supplied by Darling—and potentially other feedstocks that become economically and commercially viable into renewable diesel.
Darling and Valero will jointly seek a loan guarantee for the proposed joint venture from the US Department of Energy under the Energy Policy Act of 2005, which makes $8.5 billion of debt financing guarantees available for projects that employ innovative energy efficiency, renewable energy and advanced transmission and distribution technologies.
While the DOE loan application process has been initiated, we want to caution our investors that we are still in the early phases of this potential project, with much remaining to be done before we enter into final, binding agreements. There are no assurances that the DOE will approve the application for inclusion in the program, or, if the application is approved, that it will be approved at a sufficient funding level for the parties to agree to proceed with the project. Final approval of the project remains subject to the approval of both parties’ boards.—Darling International Chairman and Chief Executive Officer, Randall Stuewe
In 2007, ConocoPhillips and Tyson Foods Inc. formed a similar strategic alliance to produce renewable diesel from the refinery-based processing of waste animal fat. (Earlier post.) ConocoPhillips suspended the project in fall 2008 due to the deteriorating economy and a loss of federal tax credits. Tyson is continuing ahead with a second renewable diesel venture with Syntroleum in Louisiana. (Earlier post.)
Darling International Inc. is the largest publicly traded, food processing by-products recycling company in the United States. It recycles used restaurant cooking oil and by-products from the beef, pork and poultry processing industries into useable products such as tallow, feed-grade fats, meat and bone meal, and hides. These products are primarily sold to agricultural, leather, oleo-chemical and bio-diesel manufacturers around the world. In addition, it provides grease trap collection services and sells equipment to restaurants.
Valero Renewables. Earlier this year, Valero purchased six ethanol plants from bankrupt VeraSun Energy and has the approval to purchase two more. Together, the plants have an annual production capacity of 780 million gallons. The aggregate purchase price of $477 million represented approximately 30% of the plants’ replacement cost. All of the plants are operating under a new Valero subsidiary known as Valero Renewables.
As part of the acquisition, Valero also became a significant investor in Qteros. (Earlier post.)