Valero Energy Corp. released third quarter financial results on Oct. 21, reporting startup of the Diamond Green Diesel expansion project is underway. Work is also progressing on a carbon capture and storage (CCS) project that will benefit the company’s ethanol segment.

Valero’s ethanol segment reported a $44 million operating loss for the third quarter, compared to $22 million of operating income reported for the same period of last year. Adjusted operating income was $4 million, down from $36 million.

Ethanol production volumes averaged 3.6 million gallons per day in the third quarter of 2021, down 175,000 gallons per day when compared to the same period of 2020. Moving into the fourth quarter, Valero’s ethanol segment is expected to produce 4.2 million gallons per day, according to Homer Bhullar, vice president of investor relations at Valero.

During a third quarter earnings call, Joe Gorder, chairman and CEO of Valero, discussed the future of the company’s ethanol operations with regard to CCS. According to Gorder, the large-scale CCS project with BlackRock and Navigator is progressing on schedule. “Navigator has received the necessary board approvals to proceed with the carbon capture pipeline system,” he said, noting Valero is expected to be the anchor shipper for the project with eight ethanol plants connected to the system. The CCS project is expected to increase ethanol product margin, Gorder added.

Valero’s renewable diesel segment, which consists of the Diamond Green Diesel joint venture, reported $108 million in operating income for the third quarter, down from $184 million reported for the same period of last year. Renewable diesel sales volumes averaged 671,000 gallons per day during the three-month period, down 199,000 barrels per day when compared to the same quarter of 2020. Valero primarily attributed the lower operating income and sales volumes to plant downtime due to Hurricane Ida.

Despite the impacts of the hurricane, Gorder said the DGD expansion project was completed ahead of schedule and on-budget. The company is in the process of starting up the new unit, he added. That expansion project increases DGD’s renewable diesel capacity by 400 MMgy, to 690 MMgy. Development of the Port Arthur, Texas, renewable diesel facility continues to progress and is still expected to be operational in the first half of 2023, Gorder said.

Overall, Valero reported net income attributable to Valero stockholders of $463 million, or $1.13 per share, for the third quarter, compared to a net loss of $464 million, or $1.14 per share, for the same period of 2020. Third quarter adjusted net income attributable to Valero stockholders was $500 million, or $1.22 per share, compared to an adjusted net loss attributable to Valero stockholders of $472 million, or $1.16 per share.