Crude Summit: Valero bullish on renewable diesel

Renewable diesel offers the best returns of any refined product that US independent refiner Valero currently makes, chief executive Joe Gorder said today.

"The margins on renewable diesel are huge, on a relative basis, to all other products we make," Gorder said at the Argus Americas Crude Summit in Houston, Texas.

Renewable diesel is chemically identical to petroleum diesel but made from vegetable oils or animal fats. The US independent refiner produces 22,000 b/d of renewable diesel, including 18,000 b/d from a plant at its refinery in Norco, Louisiana. An already-planned expansion would bring capacity at that site to 44,000 b/d by the end of next year. Valero was also considering a 10,000 b/d plant at its Port Arthur refinery in Texas.

Renewable diesel commands strong credit prices in low carbon fuel markets such as California's and under consideration in Canada, the midwest and the Atlantic coast. The spread of those programs made renewable diesel a long-term investment, he said.

"It's a superior product and it is a very low carbon footprint," Gorder said. "For us to not think that this is going to be valuable in the future, we would have to have a view that a focus on carbon intensity was not going to matter."

By Elliott Blackburn