Darling optimistic on renewable diesel feedstocks

Food products and renewable fuel feedstock supplier Darling Ingredients has shut two of its biodiesel plants, opening up that feedstock for its Diamond Green Diesel (DGD) renewable diesel joint venture with Valero.

Unfavorable economics for biodiesel led Darling Ingredients to shut its Montreal, Quebec and Butler, Kentucky biodiesel plants in December, the company said in its 2020 earnings report. The move will free up feedstocks like used cooking oil and rendered animal fats to be accessible to the DGD venture, which has multiple expansions underway, the company said.

A 26,000 b/d expansion to the 19,000 b/d Norco, Louisiana facility is scheduled to come on line in the fourth quarter of 2021, which could give the venture an end-of-year boost in capacity.

DGD in January approved construction of a new 31,000 b/d renewable diesel plant in Port Arthur, Texas, with a start-up date in the second half of 2023. A potential expansion to the Port Arthur facilities has been pre-planned and a decision to go through with those plans will be decided in 2022.

As these expansions come on line, Darling Ingredients said it is optimistic that feedstock supply will be available to meet their demand. Anticipated increases in restaurant use in mid-2021 as Covid-19 vaccine distribution is more widespread will add to used cooking oil volumes.

The Norco expansion will have vessel and barge capabilities to receive fats from international markets that are at the right price and quality. Expectations of some of the announced renewable diesel projects by other companies not coming to fruition and economics shutting biodiesel facilities will loosen feedstock constraints, the company said.

The heating oil/soybean oil (HOBO) spread — a measure of the profitability of producing biodiesel from soybeans — reached a record low of -203¢/USG on 2 March. Biomass-based diesel D4 RINs have risen slightly, but not enough to cover lower production margins, according to biodiesel producers.

The company's animal fat production volumes were 1.2mn metric tonnes (t) in 2020, up 58,000 t from 2019. Used cooking oil volumes were 308,000 t in 2020, down by 10pc from 2019.

DGD sold 288mn gallons of renewable diesel in 2020 at an average of $2.34/USG with expectations for 2021 to bring an average price of $2.25/USG.

Darling Ingredients had profits of $296.8mn for the fiscal year 2020 ending on 2 January 2021, down from $312.6mn a year earlier. The company's profits for the three months ended 2 January 2021 were $44.7mn.

By Jena Göbel