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US' Renewable Energy Group increases downstream presence with Amber Resources buy


Amber adds 60 mil gal/year of diesel demand

Deal increases renewables market access for REG

  • Author
  • Janet McGurty
  • Editor
  • Shashwat Pradhan
  • Commodity
  • Agriculture Energy Transition Oil

Renewable Energy Group will buy California-based Amber Resources, the latest move by a biofuel company to add logistical infrastructure and increase market share to capture growing demand for low-carbon fuels.

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Renewable Energy Group will gain 60 million gal/year of diesel sales with the purchase of Amber Resources -- one of Southern California's largest full-service petroleum distributor -- as well as access to a Shell-branded lubricants business, the company said in its Jan. 4 statement.

"REG provides clean fuels that reduce carbon now, and adding the Amber Resources products service line to our network expands our low carbon fuel sales opportunities in California," REG's CEO C.J. Warner said in the statement.

Amber Resources also distributes gasoline, additives, and other transportation fuel components.

During Q3, REG sold 176 million gallons of fuel, with renewable diesel sales increasing 9 million gallons, offset by an 8-million-gallon decrease in biodiesel and petroleum diesel sales.

REG's RD sales are expected to increase as new projects come online, including REG's RD expansion at its Geismar, Louisiana, plant, which is on track to deliver 340 million gal/year by early 2024.

Additional incentives from California and its Low Carbon Fuel Standard credits continue to enhance the value of RD. In Q4 2021, the price of RD with LCSF credits averaged $6.40/gal compared with $5.15/gal for B100 biodiesel, according to S&P Global Platts assessments.

This is just the latest deal for REG in California. In November, the company joined BOOSTER to provide mobile delivery of renewable diesel, biodiesel and blended diesel to waterborne fleets in California, focusing initially on the San Francisco and Orange County areas of the state.

Logistics to bolster value chains

REG is not alone in looking to add logistic and transportation assets to its asset mix. As demand for renewable fuels grows, more producers have been aligning with transportation and logistics companies to capture the full value chain margins.

Gevo, a California-based biotechnology company, signed a deal in December to supply trading and logistics company Kolmar Americas with 45 million gal/year of renewable fuels including sustainable aviation fuel and iso-octane, a key component of renewable gasoline from its Net-Zero 2 production facility currently under construction in the Midwest.

Neste, the first mover and largest player in sustainable aviation fuel, has been successful in adding logistical flexibility and its ability to adapt existing infrastructure to move and store RD diesel and SAF.