Valero Energy Corp. sold a record volume of renewable diesel during the fourth quarter of 2022 thanks to the November startup of the Diamond Green Diesel biorefinery in Port Arthur, Texas. Ethanol production for the three-month period was down.

During an earnings call held Jan. 26, Valero Chairman and CEO Joe Gorder said the new DGD project in Port Arthur was completed under budget and ahead of schedule. Commissioning and startup commenced in November. The facility has the capacity to produce 470 million gallons per year of renewable diesel and 20 million gallons per year of renewable naphtha.

DGD, a joint venture between Valero and Darling Ingredients Inc., also operates a facility in Norco, Louisiana. Completion of the Port Arthur facility boosts DGD’s annual production capacity to approximately 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha.

Expanded DGD operations allowed Valero to set another sales volume record in the fourth quarter, Gorder said. Sales averaged 2.4 million gallons per day during the three-month period, up 851,000 gallons per day when compared to the fourth quarter of 2021. The company’s renewable diesel segment reported $261 million of operating income for the fourth quarter of 2022, compared to $150 million during the same period of the previous year.

Valero’s ethanol segment reported $7 million of operating income for the fourth quarter of 2022, down from $474 million during the same period of 2021. Adjusted operating income was $69 million, down from $475 million. Ethanol production volumes averaged 4.1 million gallons per day during the fourth quarter, down 340,000 gallons per day when compared to the same quarter of 2021. Higher operating income for the fourth quarter of 2021 was primarily attributed to high ethanol prices due to strong demand and low inventories.

Gorder said the carbon sequestration project under development by BlackRock and Navigator is progressing on schedule and is currently expected to begin startup activities in late 2024. Valero expects to be an anchor shipper on the pipeline, with eight of its 12 ethanol plants connected to the system. Gorder said participation in the carbon sequestration project is expected to lower the carbon intensity (CI) of ethanol Valero produces at the connected plants, improving the margin profile and competitive positioning of its business.

Overall, Valero reported net income attributable to Valero stockholders of $3.1 billion, or $8.15 per share, for the fourth quarter of 2022, compared to $1 billion, or $2.46 per share, for the fourth quarter of 2021.