Valero joint venture to become top U.S. renewable diesel producer

FILE PHOTO: The Valero St. Charles oil refinery is seen in Norco, Louisiana August 15, 2008. REUTERS/Shannon Stapleton

(This January 29 story corrects Darling’s headquarters location to Irving, Texas, not Norco, Louisiana in paragraph 7)

HOUSTON (Reuters) - A Valero Energy Corp joint venture will become the largest renewable diesel producer in the United States in 2023 when it opens a second facility at a site in Texas.

The second-largest crude oil refiner in the United States on Thursday said it and partner Darling Ingredients Inc approved construction of a 470-million-gallon renewable diesel plant in Port Arthur, Texas.

Once the $1.45 billion facility is complete, their Diamond Green Diesel (DGD) joint venture will be able to produce 1.2 billion gallons of renewable diesel per year from sites in Texas and Louisiana.

DGD is expanding its renewable diesel plant next to Valero’s St. Charles refinery in Norco, Louisiana. It will have the capacity to produce 690 million gallons by the end of this year, Valero said.

“We expect low-carbon fuel policies to continue to expand globally and drive demand for renewable fuels,” said Joe Gorder, Valero chief executive officer. DGD first began producing the fuel in 2013.

“Valero has been a relatively early mover on renewable diesel in the U.S.,” said Marc Amons, research analyst for downstream at consultants Wood Mackenzie. “Once this is completed, assuming no other large unknown projects come online, it would place them as the largest renewable diesel producer in the U.S.”

Darling, based in Irving, Texas, collects cooking grease and animal by-products that are the feedstocks for renewable diesel that can directly replace diesel made from crude oil.

Bio-diesel, which is made from bio-mass, must be blended with hydrocarbon diesel before it can be used in motor vehicles.

Reporting by Erwin Seba in Houston, Stephanie Kelly in New York and Arundhati Sarkar in Bengaluru; editing by Grant McCool