Vertex Energy accelerates timeline for full Mobile RD output

Vertex Energy has moved up its timeline for renewable diesel at the Mobile, Alabama, refinery expecting to reach full rates by the end of 2023, CEO Ben Cowart said March 8.

"We currently expect to begin producing renewable diesel (RD) at the Mobile refinery by year-end 2022, with RD production ramping up to 14,000 b/d by mid-year 2023," said Cowart on the Q4 2021 results call.

The purchase of the 90,000 b/d Mobile refinery from Shell has been delayed by regulatory and financial circumstances but Cowart said the deal is expected to close on April 1, 2022, as final regulatory papers are ready to be signed.

Cowart said Vertex has moved up "maybe by a quarter" ramping up the "additional 4,000 b/d production" at its Mobile refinery to the end of 2023, but added there "is still a lot of work."

Cowart said the main reason for the accelerated timeline was the "ability to procure an unused hydrogen plant that is manufactured and in storage" and will be moving to the site.

Vertex will process both hydrocarbon and renewable feeds at the plant, but it doesn't see any problem getting crude oil in a tight market, given that Mobile runs light, sweet crude which is more available than heavier crudes where supply is tight.

The company signed in February an offtake agreement with Idemitsu Apollo Renewable Corporation for 100% of the Mobile renewables output, which will increase volumes of the low-carbon fuel headed to the lucrative California market.

Platts assessments show the US West Coast renewable diesel prices including California's Low Carbon Fuel Standard credits as well as federal credits averaging $6.84/gal despite a drop off in LCFS credits to an average of $1.44/gal so far in Q1 2022. This is up from the $6.40/gal in Q4 2021 when LCFS credit prices averaged $1.54/gal.

Demand for RD reached 1 billion gal/yr in 2021 and is expected to grow sharply as more projects come online in 2022 and beyond, according to S&P Global Commodity Insights Platts Analytics.