Diamond Green’s $1.1 billion expansion in Norco would make it the second biggest renewable diesel refinery in the world.
Valero’s board of directors approved the move Monday, which cleared the way to producing 675 million gallons a year of renewable diesel at the refinery.
Since the start of the Valero-Darling Ingredients joint venture in 2013, the refinery has steadily grown production to meet growing demand of its customers – California, Canada and Europe – all with carbon reduction programs.
“They all place a premium on these low carbon fuels,” said Martin Parrish, Valero’s vice president of alternative energy and project development. “It’s a premium priced product in the marketplace.”
Joe Gorder, Valero chairman, president and chief executive officer, said, with low carbon mandates in North America and Europe projected to continue driving strong demand and premium pricing for renewable diesel, this expansion adds a second, independent parallel plant adjacent to the existing facility and a renewable naphtha finishing facility, which provides incremental low carbon fuel standard credit generation capability.
Valero expects its 50 percent share, or approximately $550 million, to be funded from cash generated by Diamond Green.
Parrish added renewable diesel has the same properties as hydrocarbon diesel, but that it has a lower carbon footprint. The expansion would more than double production of the fuel, also making it the largest of its kind in the U.S.
“We’ve been doing this for five years,” he said. “We keep expanding because these programs are growing.”
Parrish called the company’s St. Charles Parish site logistically “perfect” for receiving waste fats from the Midwest, used cooking oil from the U.S. and corn oil from ethanol plants in the corn belt coming down by rail. They are processed and delivered as diesel mostly by rail to customers.
Site work has begun for the three-year project, which will involve building a free standing building north of the current building. The Diamond Green site, with both refineries, will be about 50 acres, Parrish said.
Plans are to have the new refinery operational by mid-2021.
“It’s going to be essentially the same as the first one, but larger,” Parrish said.
At peak construction, Parrish said they anticipate temporary employment at 1,600 people. Once in operation, the plant will create 50 permanent jobs and contractor positions.
Parrish said some work also will be done at the docks (inbound and outbound) in Norco.
“We’re getting a lot of discussion about it,” he said. “It’s a neat project. We feel good to be doing it and looking forward to getting it online.”
Valero acquired its oil refinery in Norco in 2003. When it entered into the joint venture with Darling Ingredients, diesel production began at 130 million gallons a year and steadily rose to 275 million gallons a year with a recent expansion until the first plant reached capacity.
“We’re pleased to be taking this next step in our partnership with Darling Ingredients,” said Joe Gorder, Valero chairman, president and chief executive officer. “This growth project fits nicely within our current capital allocation framework and is expected to deliver high returns for investors without changing our capital profile.”
Valero Energy Corp., through its subsidiaries, is an international manufacturer and marketer of transportation fuels and other petrochemical products.
Darling Ingredients Inc. is a global developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients, creating a wide range of ingredients and specialty solutions for customers in the pharmaceutical, food, pet food, feed, technical, fuel, bioenergy, and fertilizer industries.