Valero reports profitable Q3 for renewable diesel, ethanol

Valero Energy Corp. released third quarter financial results on Oct. 25, reporting both its renewable diesel and ethanol operations were profitable during the three-month period. The company also said additional renewable diesel capacity will be online next month.

Valero’s renewable diesel segment, which consists of the Diamond Green Diesel joint venture, reported $212 million of operating income for the third quarter, up from $108 million reported for the same period of 2021. The DGD joint venture currently includes three projects. The original renewable diesel facility at Valero’s St. Charles refinery in Norco, Louisiana, is referred to as DGD 1. The DGD 2 project, complete last year, expanded the capacity of the St. Charles biorefinery to approximately 698 MMgy. Finally, DGD 3 is a new 470 MMgy renewable diesel project under development at Valero’s existing refinery in Port Arthur, Texas. The DGD 3 project is expected to begin operations in November and will boost DGD’s total production capacity to 1.2 billion gallons per year of renewable diesel and 50 MMgy of renewable naphtha.   

According to Valero, renewable diesel sales volumes averaged 2.2 million gallons per day during the quarter, up 1.6 million gallons per day when compared to the third quarter of last year. Valero attributed the higher stales volumes due to DGD 1 down time in the third quarter of 2021 resulting from Hurricane Ida and the impact of additional volumes from DGD 2, which started up in the fourth quarter of last year.

During an earnings call held Oct. 25, Valero Chairman and CEO Joe Gorder confirmed the new DGD 3 renewable diesel plant is currently in the startup phase, with operations expected to begin next month. Homer Bhullar, vice president of investor relations and finance, said that the company expects total renewable diesel sales volumes to be approximately 750 million gallons this year.

Valero’s ethanol segment reported $1 million of operating income for the third quarter, compared to a $44 million operating loss reported for the same period of last year. Ethanol production volumes averaged 3.5 million gallons per day during the three-month period. Ethanol production is expected to expand to 4.1 million gallons per day in the fourth quarter, according to Bhullar.

Gorder briefly discussed the carbon capture and sequestration (CCS) project under development by BlackRock and Navigator, noting that Valero is expected to be an anchor shipper for the project with eight of its ethanol plants connected to the CCS pipeline. The CCS project is progressing on schedule, Gorder said, with startup activities expected to begin in late 2024.  

Overall, Valero reported net income attributable to Valero stockholders of $2.8 billion, or $7.19 per share, for the third quarter of 2022, compared to $463 million, or $1.13 per share, for the same period of last year.