Valero reports solid Q2 performance for biofuel segments

Valero Energy Corp. released second quarter financial results on July 28, reporting record high renewable diesel production volumes and the sale of the company’s 110 MMgy ethanol plant located in Jefferson, Wisconsin.

The company’s renewable diesel segment, which consists of the Diamond Green Diesel joint venture, reported $152 million of operating income for the second quarter of 2022, down from $248 million reported for the same period of last year. Renewable diesel sales volumes averaged 2.2 million gallons per day, up 1.3 million gallons per day when compared to the second quarter of 2021. Increased renewable diesel sales volumes were attributable to the fourth quarter 2021 startup of the DGD expansion project at the St. Charles refinery in Norco, Louisiana.

During an earnings call, Valero CEO Joe Gorder said that the DGD project under development at the company’s Port Arthur refinery in Texas is expected to operational in the fourth quarter of this year. The 470 MMgy facility is expected to nearly double DGD’s total annual production capacity to approximately 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha.

Valero’s ethanol segment reported $101 million of operating income for the second quarter of 2022, up from $99 million reported for the same period of last year. Adjusted operating income, which primarily excludes the gain from the sale of the company’s Jefferson ethanol plant, was $79 million.

In documents filed with the U.S. Securities and Exchange Commission, Valero announced the company sold the Jefferson ethanol plant for $32 million in June 2022. According to Valero, the Jefferson plant was temporarily idled in 2020 at the onset of the COVID-19 pandemic in response to decreased demand for ethanol. The company said it completed an evaluation of the plant during the third quarter of 2021 and concluded that the facility was no longer a strategic asset for its ethanol business. Operations at the Jefferson plant were permanently ceased at that time.

Ethanol production volumes averaged 3.9 million gallons per day during the second quarter of 2022. Production is currently expected to be maintained at that level during the third quarter.

Gorder said BlackRock and Navigator’s carbon sequestration project is progressing on schedule and is expected to begin startup activities in late 2024. Valero is expected to be the anchor shipper on the system, with eight of its 12 ethanol plants connected.

Overall, Valero reported net income attributable to Valero stockholders of $4.7 billion, or $11.57 per share, for the second quarter of 2022, compared to $162  million, or 39 cents per share, for the second quarter of 2021.