Diamond Green Diesel (DGD) Approves a Sustainable Aviation Fuel Project at Port Arthur, Texas

Rhea-AI Summary

Valero Energy Corporation (NYSE: VLO) and Darling Ingredients Inc. (NYSE: DAR) have finalized their investment decision for a Sustainable Aviation Fuel (SAF) project at the DGD Port Arthur plant, a joint venture between the two companies. The project, estimated to cost $315 million, aims to upgrade 50% of the plant's 470 million gallon annual capacity to SAF by 2025. This positions DGD as one of the largest SAF producers globally, enhancing Valero's growth strategy focused on renewables and reducing carbon intensity.

Positive

• Expected completion of SAF project in 2025 will significantly boost production capacity and market position.
• Valero's investment aligns with growth strategy in renewable energy, with anticipated strong customer demand for SAF.

Negative

• Project costs of $315 million may impact financials in the short term.
• Dependence on external market conditions and potential regulatory changes could create operational risks.

SAN ANTONIO--(BUSINESS WIRE)-- Valero Energy Corporation (NYSE: VLO, “Valero”) and Darling Ingredients Inc. (NYSE: DAR, “Darling”) announced today that the companies have made the final investment decision on a Sustainable Aviation Fuel (SAF) project at the DGD Port Arthur plant, which is owned and operated by Diamond Green Diesel Holdings LLC, a 50/50 joint venture between Valero and Darling. Upon completion of the project, which is expected in 2025, the DGD Port Arthur plant will have the capability to upgrade approximately 50 percent of its current 470 million gallon annual production capacity to SAF. The project’s estimated cost is $315 million, with half of that attributable to Valero. With the completion of this project, DGD is expected to be one of the largest SAF manufacturers in the world.

“This project is a natural extension of our liquid fuels manufacturing expertise and demonstrates our growth strategy through innovation in renewables,” said Joe Gorder, Valero’s Chairman and Chief Executive Officer. “Underpinned by strong interest from customers, sustainable aviation fuel provides an economic path to further reduce the carbon intensity of our products while expanding our long-term competitive advantage.”

About Valero

Valero Energy Corporation, through its subsidiaries (collectively, “Valero”), is a multinational manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels and petrochemical products, and sells its products primarily in the United States (“U.S.”), Canada, the United Kingdom (“U.K.”), Ireland and Latin America. Valero owns 15 petroleum refineries located in the U.S., Canada and the U.K. with a combined throughput capacity of approximately 3.2 million barrels per day. Valero is a joint venture member in Diamond Green Diesel Holdings LLC, which owns two renewable diesel plants located in the U.S. Gulf Coast region with a production capacity of approximately 1.2 billion gallons per year, and Valero owns 12 ethanol plants located in the U.S. Mid-Continent region with a combined production capacity of approximately 1.6 billion gallons per year. Valero manages its operations through its Refining, Renewable Diesel, and Ethanol segments. Please visit investorvalero.com for more information.

Safe-Harbor Statement

Statements contained in this release that state Valero’s or management’s expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words “believe,” “expect,” “should,” “estimates,” “intend,” “target,” “will,” “plans,” “forecast,” and other similar expressions identify forward-looking statements. Forward-looking statements in this release include those relating to expected timing of completion, cost and performance of projects, future market and industry conditions, future operating and financial performance, and management of future risks. It is important to note that actual results could differ materially from those projected in such forward-looking statements based on numerous factors, including those outside of Valero’s control, such as legislative or political changes or developments, market dynamics, cyberattacks, weather events, and other matters affecting Valero’s operations or the demand for Valero’s products. These factors also include, but are not limited to, the uncertainties that remain with respect to the Russia-Ukraine conflict, the impact of inflation on margins and costs, economic activity levels, the COVID-19 pandemic, variants of the COVID-19 virus, governmental and societal responses thereto, and the adverse effects the foregoing may have on Valero’s business or economic conditions generally. For more information concerning these and other factors that could cause actual results to differ from those expressed or forecasted, see Valero’s annual report on Form 10-K, quarterly reports on Form 10‑Q, and other reports filed with the Securities and Exchange Commission and available on Valero’s website at valero.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230131006008/en/

Investors:

Homer Bhullar, Vice President – Investor Relations and Finance, 210-345-1982

Eric Herbort, Director – Investor Relations, 210-345-3331

Gautam Srivastava, Senior Manager – Investor Relations, 210-345-3992

Media:

Lillian Riojas, Executive Director – Media Relations and Communications, 210-345-5002

Source: Valero Energy Corporation

FAQ

What is the Sustainable Aviation Fuel project announced by Valero and Darling?

Valero and Darling announced a $315 million investment in a Sustainable Aviation Fuel project at the DGD Port Arthur plant, aiming for completion by 2025.

How much will Valero invest in the SAF project at DGD Port Arthur?

Valero will invest approximately $157.5 million, which is half of the total project cost of $315 million.

When is the expected completion date of the SAF project at DGD Port Arthur?

The SAF project is expected to be completed in 2025.

What percentage of DGD Port Arthur's production capacity will be upgraded to SAF?

The project aims to upgrade approximately 50% of the plant's current production capacity of 470 million gallons annually to SAF.

What are the potential risks associated with Valero's SAF project?

Key risks include market conditions, regulatory changes, and the overall financial impact of the $315 million investment.