Valero reports profitable Q1 for ethanol, renewable diesel

Valero Energy Corp. released first quarter 2022 financial results on April 26, reporting both its ethanol and renewable diesel segments were profitable during the three-month period. Production of both fuels was up.

Valero’s renewable diesel segment, which consists of the Diamond Green Diesel joint venture, reported $149 million in operating income for the first quarter, down from $203 million reported for the same period of 2021. Renewable diesel sales volumes averaged 1.7 million gallons per day during the three-month period, 871,000 gallons per day higher than in the first quarter of 2021. Valero attributed the higher sales volumes to the fourth quarter 2021 startup of the DGD expansion project, referred to as DGD 2. Additional production capacity is expected to be online later this year.

During an earnings call, Valero CEO Joe Gorder explained the DGD 3 project, located next to the company’s Port Arthur refinery in Texas is now expected to be operational in the fourth quarter of 2022. That 470 MMgy plant will boost DGD’s total annual capacity to approximately 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha.  

Homer Bhullar, vice president of investor relations and finance at Valero, said that startup of the DGD 3 project is expected boost total renewable diesel sales volumes for 2022 to approximately 750 million gallons.

Valero reported $1 million in first quarter operating income for its ethanol segment, compared to a $56 million operating loss reported for the same period of last year. Ethanol production volumes averaged 4 million gallons per day for the three-month period, up 483,000 gallons per day when compared to the first quarter of 2021.

Moving into the second quarter, the ethanol segment is expected to continue to produce 4 million gallons per day, according to Bhullar.

Gorder said that the company’s ethanol business generated positive operating income during the first quarter despite a weak margin environment. He noted that the carbon capture and sequestration (CCS) project under development by BlackRock and Navigator is progressing on schedule. “Valero is expected to be the anchor shipper with eight ethanol plants connected to this system, which should provide a lower carbon intensity ethanol product and result in higher product margins,” Gorder said.

Gorder also noted that Valero continues to evaluate other low-carbon opportunities, such as sustainable aviation fuel (SAF), renewable hydrogen, and additional renewable naphtha and CCS projects.

Overall, Valero reported net income attributable to Valero stockholders of $905 million, or $2.21 per share, for the first quarter of 2022, compared to a net loss of $704 million, or $1.73 per share, for the same period of 2021.